Unique Legal Issues Affect Employers on Arizona Indian Reservations​

Date: August 2011

Generally, tribes and tribally owned entities are not subject to state laws. While federal laws are generally applicable, some federal laws expressly exempt Indian tribes.

With respect to employment-related laws, the Americans with Disabilities Act (ADA), Title VII of the 1964 Civil Rights Act (the federal anti-discrimination statute) and the Employment Retirement and Income Security Act (ERISA) specifically state that they do not apply to tribes, although there are some ERISA exceptions. The term “tribe” has been defined by case law to include tribally owned entities; thus, since these laws do not apply to a tribe, they do not apply to businesses that the tribe wholly owns.

The applicability of other federal laws, such as the Fair Labor Standards Act (FLSA), Family Medical Leave ACT (FMLA) and Occupational Safety and Health Act (OSHA) is a bit more complicated and subject to the courts’ interpretation. This piecemeal approach has led to many rulings, some of which are difficult to reconcile.

Conflicting Standards

Adding to the confusion are conflicting standards in many court rulings. The courts tend to find that federal laws that are silent about applicability to tribes (a) do apply when the tribe is acting like a commercial enterprise but (b) do not apply when the tribe is acting like a governmental entity. For example, the U.S. Ninth Circuit Court of Appeals ruled, in one case, that the FLSA’s overtime pay requirement applies to a tribally owned store; in another case, that Court ruled that the same requirement does not apply to payment of tribal police.

Another instance in which courts have found that certain federal employment laws do not govern tribes is when the tribe’s ability to govern itself would be hampered. In one case, a nearby jurisdiction ruled that OSHA did not govern the workplace safety issues at a tribally owned wood manufacturing plant because enforcement would cause a treaty to be abrogated; conversely, in a comparable case, the court found that OSHA was applicable to a tribally owned farm where no treaty rights were implicated. As is evident from these rulings, determining the federal rights of employees on the reservation requires a careful analysis of the type of business involved.

Tribal Preference

Business operations on a reservation must also address the Title VII provision that permits tribes to preferentially hire local Indians. This “Indian preference” is generally codified by the tribes’ own laws, requiring businesses on or near the reservation to take certain steps to ensure that tribal members and other local Indians are hired first. Many tribal laws and regulations also prohibit the termination of employees without good cause – a prohibition that conflicts with the State of Arizona’s “at-will” employment doctrine.

Before hiring employees on or near a reservation, be sure to take all of the levels of potentially applicable law into consideration, so that your employment practices and employee handbook accurately reflect the rights your employees do and do not have.