The Au Pair Program is a Department of State exchange visitor program that involves three parties: au pairs who are foreign citizens between the ages of 18 and 26; 15 sponsor organizations, which are private placement agencies that must be officially designated and authorized by the State Department; and host families. Au pairs come to the United States to experience one to two years abroad, improve their English, and take care of children. Up until December, this program had been regulated solely by federal statutes and regulations. Recently, in Capron v. Office of the Attorney General of Massachusetts, the First Circuit held that federal law did not preempt Massachusetts state laws that regulate domestic workers. As a result, Massachusetts labor laws now apply to au pairs.
The plaintiffs in the case are Cultural Care, one of the fifteen Department of State sponsor agencies, and two host families with whom Cultural Care has placed au pairs. The plaintiffs sought declaratory and injunctive relief from the Massachusetts Attorney General’s enforcement of state wage and hour laws. The federal District Court for the District of Massachusetts dismissed the case because nothing in the federal statutes or regulations “suggests that states may not supplement federal protections to au pairs or that the goals of cultural exchange would be thwarted by additional labor protections by the states.” Judge Talwani stressed that the federal au pair regulations mandate compliance with the Fair Labor Standards Act, which itself allows states to impose higher minimum wages than federal minimum wage.
The First Circuit affirmed. Writing for a unanimous panel, Judge Barron considered whether the federal laws on the Au Pair Program preempt state laws. The Constitution of the United States, in the Supremacy Clause, gives Congress the power to preempt state law. Judge Barron explained that there are three ways that federal statutes or regulations can preempt state law: express preemption, field preemption, and obstacle preemption. The plaintiffs conceded that there was no express preemption. Field preemption applies when: (1) the framework of regulation is “so pervasive” that it leaves “no room for the States to supplement it” and (2) where a “federal interest . . . [is] so dominant that the federal system . . . preclude[s] enforcement of state laws on the same subject.”
The First Circuit rejected the plaintiff’s argument that the “detailed and comprehensive nature” of the Au Pair Program indicates that Congress or the Department of State intended to govern the field of au pair wage regulation. The court noted that since the detailed federal laws only regulate the sponsor agencies, they do not indicate an intent to oust state employment laws. The First Circuit also rejected the argument that the dominance of the federal interest in regulating immigration and managing foreign relations indicates that Congress or the Department of State intended to preempt state laws governing wages of au pairs. On this point, the court said the federal interest over immigration did not preempt a state law that did not directly regulate immigration: in this case a generally applicable state wage law. Furthermore, the federal interest in promoting cultural exchange did not dominate over state wage laws because “[i]t is hardly evident that a federal foreign affairs interest in creating a ‘friendly’ and ‘cooperative’ spirit with other nations is advanced by a program of cultural exchange that, by design, would authorize foreign nationals to be paid less than Americans performing similar work.”
The First Circuit then addressed the third type of preemption: conflict preemption. The plaintiffs contended that the program intended “to set a uniform, nationwide ceiling on the obligations” in order to encourage a diverse array of American families throughout the United States to host au pairs and to encourage foreign nationals to seek placements in all parts of the country. Enforcing Massachusetts wage and hour laws, or any other state law, would necessarily destroy the uniformity of the nationwide Au Pair Program and thus conflict with it. The court, however, did not think that the plaintiffs had produced enough affirmative evidence of a “ceiling-setting” intent by Congress or the Department of State. The First Circuit also considered the evidence and arguments advanced by the Department of State, which agreed with the plaintiffs. While the First Circuit was willing to grant Auer deference to agency interpretations of its own regulations as explained in its legal briefs, the First Circuit only conferred Skidmore deference on the “agency’s conclusion that state law is preempted.”
The plaintiffs’ and Department of States’ evidence included the regulation that au pairs be paid federal minimum wage for forty-five hours of work and an education and transportation stipend regardless of the number of hours that the au pair works. The court thought that this regulation best represented a floor, not a ceiling, because the regulation was targeted at sponsors who need only ensure that this regulation is met and does not preclude the possibility of host families voluntarily paying the au pair more. The regulations cross reference the Fair Labors Standards Act (FLSA): “Sponsors shall require that au pair participants [a]re compensated at a weekly rate based upon 45 hours of child care services per week and paid in conformance with the requirements of the [FLSA] as interpreted and implemented by the [DOL.]” The FLSA itself provides that: “[n]o provision of this chapter or of any order thereunder shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter.”
The court also rejected the plaintiffs’ evidence from the program’s regulatory history, including 1994 Interim Final regulations stating the need for “uniform compensation” for au pair participants. The court explained that the agency decided this in order to make compliance with federal minimum wage across families easier to enforce. Agency commentary from 1995 urged “the programmatic need for uniform wage remains,” citing the desire to “eliminate the need for host families to keep individualized records.” The court concluded that: “the reference to uniformity reflects the agency’s continued interest in setting the compensation amount that sponsors would be required to ensure was paid at an amount at least equal to the FLSA minimum but still uniform for all host families.” Nevertheless, the court concluded that “the Au Pair Program operates parallel to, rather than in place of, state employment laws.”
The First Circuit’s analysis of the federal regulations seems to miss the forest for the trees: failing to see the comprehensive and uniform federal program of cultural exchange that operates across the nation. As the Department of State asserted, “the Au Pair Program regulations were long understood by the agency itself to oust state minimum wage laws.” A big-picture view of the program suggests that there is indeed a “pervasive” framework of regulation and a dominant federal interest in foreign cultural exchange with which state laws that disrupt this uniformity conflict.
The court would not have made this error if it had given the Department of State deference in determining whether the agency had a “ceiling setting intent” in creating the Au Pair Program. Because the question of preemption in this case turned in large part on whether the Department of State’s regulations indicated a “ceiling-setting intent,” the First Circuit should have applied Auer deference to the Department of State’s interpretation. The Department of State’s long standing practice, its official brief, and its deep expertise about the Au Pair Program seem to fit Kisor v. Wilkie’s test for Auer deference: that the interpretation be the agency’s “authoritative” and “official position,” “implicate its substantive expertise,” and reflect its “fair and considered judgment.”
If the Department of State’s regulations did have a ceiling-setting intent, then preemption follows. Instead, the First Circuit relied too heavily on Wyeth v. Levine’s holding that agencies do not receive deference on the legal conclusion that preemption exists. While that may be true, the conclusion that the Department of State had a ceiling-setting intent is one step removed from the conclusion of preemption, and thus should get deference.
The First Circuit’s analysis about how to apply Auer and Skidmore deference during federal preemption analysis takes place in the context of dueling Supreme Court decisions on this same issue. In Pliva Inc. v. Mensing, the Supreme Court applied Auer deference to the FDA’s interpretation that its regulation required generic drug labeling uniformity; the conclusion followed that this uniformity made it impossible for drug manufacturer’s to comply with differing state law labeling standards. By failing to cite PLIVA, the First Circuit took sides in the debate over how much deference to accord agencies when considering the issue of federal preemption. Unfortunately, the result here was to reject Department of State expertise about the Au Pair Program.
The decision in this case has led to the first “break” in uniformity in the Au Pair Program. Since 1994, program participants have acted under the understanding that federal regulations and minimum wage laws applied, but not state wage laws. Now, Massachusetts host families are the first to apply both federal and state laws to the Au Pair Program. These families anticipate that this will lead to a decline in the Au Pair Program in Massachusetts, and indeed one sponsor agency has already suspended operations in Massachusetts, citing “the conflict and contradiction between State and Federal laws.” Perhaps this provides ultimate proof that the state laws create an obstacle in accomplishing the federal program’s goals.