Tribes are exempt from a federal labor law that requires the payment of overtime to governmental employees, an appeals court ruled last week.

A group of tribal police officers sued the Navajo Nation for failing to make timely and competitive overtime payments. But a three-judge panel of the 10th Circuit Court of Appeals issued a unanimous decision in favor of the tribe last Thursday.

The Federal Labor Standards Act (FLSA) is "a statute of general applicability," Chief Judge Mary M. Schroeder wrote for the majority, that doesn't mention tribes at all. Further, she added, the police officers are performing services central to the operation of the tribal government.

"Tribal law enforcement clearly is a part of tribal government and is for that reason an appropriate activity to exempt as intramural," the court said in the 11-page decision.

The court was quick to note that the decision applies only to "intramural" matters affecting internal tribal relations and self-government. "We have been careful to allow such exemptions only in those rare circumstances where the immediate ramifications of the conduct are felt primarily within the reservation by members of the tribe and where self-government is clearly implicated," Schroeder wrote.

In contrast, a tribal health corporation that provides services off the reservation and employs non-Indians is subject to labor laws because of its commercial nature. That was the holding the 9th Circuit made in January 2003 when it ruled the Rumsey Rancheria's Chapa-De Indian Health Program had to comply with subpoenas from the National Labor Relations Board (NLRB).

"We were careful to distinguish between what is a governmental function and what is primarily a commercial one," Schroeder observed, recalling the Chapa-De decision.

The governmental/commercial distinction is now poised to become a major issue as tribes seek to reaffirm their blanket exemption to labor laws. In fact, that was the case up until two weeks ago, when the NLRB overturned 30 years of precedent and expanded its jurisdiction over tribes, particularly casinos.

"When Indian tribes participate in the national economy in commercial enterprises, when they employ substantial numbers of non-Indians, and when their businesses cater to non-Indian clients and customers, the tribes affect interstate commerce in a significant way," the board wrote in a 3-1 decision that has sparked outcry in Indian Country.

To determine jurisdiction, the board will now look at the commercial nature of a tribal enterprise, whether it employs and impacts non-Indians and whether treaty rights are affected. Previously, the board stayed away from on-reservation businesses altogether.

The 9th Circuit's language in the Navajo and the Chapa-De cases suggests the board's reasoning could withstand court scrutiny. Tribal leaders and advocates say the debate is likely to end up before the U.S. Supreme Court, which doesn't appear to have considered the issue before.

A 10th Circuit decision in favor of a New Mexico tribe found that tribes could enact their own right-to-work laws. The NLRB did not appeal to the Supreme Court.

The ruling expanding jurisdiction over tribes came in a dispute between the San Manuel Band of Mission Indians of California and a union that has been critical of tribal sovereignty. The NLRB did not rule on the merits but merely said the case could go forward.

Nearly two dozen tribes, plus the National Indian Gaming Association and the National Congress of American Indians, had been watching the San Manuel case and submitted briefs to the NLRB. The San Manuel Band is expected to appeal the decision to a federal court.

Get the Decision:
Snyder v. Navajo Nation (June 10, 2004)

National Labor Review Board Decisions:
San Manuel Indian Bingo and Casino | Yukon Kuskokwim Health Corporation

Federal Court Decisions:
NAT'L LABOR RELATIONS BD v. SAN JUAN PUEBLO (10th Circuit January 11, 2002) | NAT'L LABOR RELATIONS BD. v. CHAPA DE INDIAN HEALTH PROGRAM, INC (9th Ciruit January 16, 2003)

Relevant Links:
San Manuel Indian Bingo and Casino - http://www.sanmanuel.com
Hotel Employees and Restaurant Employees Union - http://www.hereunion.org