Labor & Employment Law Daily Wrap Up, STATE-LAW CLAIMS—9th Cir.: Ninth Circuit denies rehearing of minimum wage findings against ICE center operator, (Aug 14, 2025)

By Jason Albright, J.D.

“Our colleague’s equation of the federal government and its contractors is contrary to long-settled black letter law.”

The Ninth Circuit, in a 2-1 decision, has denied a petition for rehearing, or rehearing en banc, of a January 2025 decision finding that civil detainees in an ICE enforcement and processing center operated by The GEO Group, Inc., were entitled to the minimum wage under Washington law. In an opinion respecting denial of rehearing, Chief Judge Murguia and Judge Fletcher argued that the federal appeals court’s holding does not discriminate against the federal government vis-à-vis Washington state criminal detention centers because this case involves civil detainees held while their immigration status is determined. The two judges also rejected arguments that the detainees were not “employees” under the Washington Minimum Wage Act or that the state should treat federal contractors in the same manner it is required to treat the federal government itself. Judges Bumatay and Collins wrote separate dissents from the denial of rehearing en banc (Nwauzor v. The GEO Group, Inc., Nos. 21-36024 and 21-36025 (9th Cir. Aug. 13, 2025)).

Prior decision. Previously, the appeals court held, in a 2-1 decision, that the application of Washington’s Minimum Wage Act (MWA) to civil detainees held in GEO’s privately operated federal detention center in Tacoma, Washington did not violate the doctrine of intergovernmental immunity. The court had further held that the fact that the MWA applies to civil detainees working in an immigration detention center operated by a private for-profit company does not transform it into a law that has more than an incidental effect on immigration. The appeals court below thus applied the presumption against preemption “when a state regulates in an area of historic state power.” Judge Bennett filed a separate dissenting opinion.

Panel rehearing and rehearing en banc denied. In a brief per curiam order, the Ninth Circuit denied both a petition for panel rehearing and rehearing en banc, with Chief Judge Murguia and Judge Fletcher voting against both and Judge Bennett voting to grant both. The matter “failed to receive a majority of votes of the nonrecused active judges in favor of en banc consideration,” according to the appeals court.

Three points. In their opinion respecting the denial of rehearing en banc, Murguia and Fletcher wrote to emphasize three key points addressed by Judge Bumatay’s dissent from the denial.

Discrimination against federal government? First, the two took issue with Bumatay’s contention that the panel’s prior decision discriminates against the federal government. Bumatay argued that the panel requires GEO to pay higher wages to its employees than the state of Washington pays its comparable employees. He compared the wage GEO must pay to its detainees to the wage the state pays to its “detainees,” but that comparison was “inapt,” they noted.

Specifically, the Washington “detainees” to which he referred “are convicted felons held in state-operated and state-owned prisons,” the two observed, and their employment is part of Washington’s penal regime. The plaintiffs in the case here, however, are civil detainees, held while their immigration status is determined. They are not convicted felons.

“Through its employment of civil detainees,” Murguia and Fletcher underlined, “GEO is able to avoid hiring about 85 full-time employees. Plaintiffs’ employment was not part of a State’s penal regime. It was part of a private company’s business model. The Washington Minimum Wage Act regulates this type of private business activity uniformly regardless of whether the entity is contracting with the federal or state government.”

“Employes” under Washington law. Murguia and Fletcher also took issue with Bumatay’s argument that the plaintiffs were not “employees” under the Washington statute because “federal law prohibits the employment of illegal aliens.”

“Even if our colleague’s statement of law were applicable to this case,” Murguia and Fletcher said, “it ignores the fact that some of the detainees confined by GEO are not ‘illegal aliens.’ Some detainees held by GEO are entitled to remain in the United States. They will be released back into the United States once their immigration status is determined.”

In addition, the Washington Supreme Court’s reasoned response to the Ninth Circuit’s certified question at an earlier point in the case concluded that “detained workers at a private detention facility are ‘employees’ within the meaning of the [Minimum Wage Act].” Nwauzor v. The Geo Grp., Inc., 540 P.3d 93, 104 (2023). The prior majority opinion, Murguia and Fletcher argued, “faithfully applied that holding.” “However much our colleague would like to see the matter differently, plaintiffs were, in fact, employees. They performed work for GEO, and they were paid for performing that work.”

Federal government and federal contractors. Finally, Murguia and Fletcher observed that Bumatay “ignores the fundamental distinction between the federal government and its contractors.” Adoption of this position, “contrary to long-settled black letter law,” would allow any government contractor to refuse to pay state-mandated minimum wage to its employees, and “No one in this case, not even GEO, has suggested that this is the law.”

Judge Bumatay’s dissent. In his dissent from the decision not to rehear the case en banc, Judge Bumatay, joined by Judges Callahan and VanDyke, primarily argued that “the fundamental question here is whether the Supremacy Clause protects a federal program, performed by federal contractors, from state regulation.” “The answer,” he said, “must be ‘yes.’”

“Allowing the panel majority’s decision to stand sets a dangerous precedent,” Bumatay continued. “Under this court’s decision, any State can impair any federal policy—no matter how central to the federal government—so long as the State regulates federal contractors rather than the federal government itself.”

Dissent of Judge Collins. In a separate dissent from denial of rehearing en banc, Judge Collins, joined by Judges R. Nelson and Bress, argued that the panel majority’s decision contravenes controlling Ninth Circuit and U.S. Supreme Court precedent applying the doctrines of intergovernmental immunity and federal preemption.

The case is Nos. 21-36024 and 21-36025.

Judge: Per curiam.

Attorneys: Thomas Scott-Railton (Gupta Wessler) and Adam Jared Berger (Schroeter Goldmark & Bender) for Ugochukwu Goodluck Nwauzor and Fernando Aguirre-Urbina. Jose Joel Alicea (Cooper & Kirk) for The Geo Group, Inc.

Companies: The Geo Group, Inc.

MainStory: TopStory StateLawClaims WageHour MinimumWage Immigration AlaskaNews ArizonaNews CaliforniaNews HawaiiNews IdahoNews MontanaNews NevadaNews OregonNews WashingtonNews GCNNews