The Perfect Scam

For the workers life is no carnival, believe it or not

In 1961 Congress extended minimum-wage requirements to cover seamen on vessels registered in the United States. But the lawmakers left intact the exemption for foreign ships. The U.S. Supreme Court reinforced the flag of convenience system in 1963, when the justices decided this nation's labor laws, including the right to organize, do not apply to foreign cargo vessels engaging in American commerce, even if the owners are from the United States.

By ensuring cheap labor and the absence of union rights, U.S. authorities provided the foundation on which Carnival and others would build billion-dollar empires during the next three decades. Despite repeated attempts by crusading lawmakers, Congress has refused to throw a line to cruise workers left adrift. The last rescue attempt foundered in 1993, when a Republican-controlled Congress rejected legislation introduced by Rep. William Clay (D-Mo.) to extend U.S. labor laws to foreign-flagged vessels, such as Carnival's, that regularly engage in U.S. commerce. The Coast Guard and Department of Justice, which currently monitor foreign vessels' adherence to American environmental regulations, would have been responsible for enforcement.

"The bulk of the lobbying against the bill came from the cruise ship industry," recalls Peter Rutledge, a former Clay aide. "You can operate huge cargo ships now with seven or eight people. But you can't operate a cruise ship without stewards to take care of your passengers. So [cruise ships] have much higher labor costs than the merchant side of the industry." Rutledge thinks it is unlikely any member of Congress would reintroduce a similar bill unless Democrats regain control of the House of Representatives in November.

Carnival workers take a few minutes to lunch with the birds in a luxurious employee lounge
Michael Marko
Carnival workers take a few minutes to lunch with the birds in a luxurious employee lounge
Carnival workers take a few minutes to lunch with the birds in a luxurious employee lounge
Michael Marko
Carnival workers take a few minutes to lunch with the birds in a luxurious employee lounge

Although the U.S. government cleared the way for cruise lines to pay ultralow wages, the companies may not avoid federal scrutiny forever. New Times has discovered that Carnival and its competitors may regularly violate a provision of the Fair Labor Standards Act that has never been applied to cruise ship workers. Following the letter of the law could cost the company millions of dollars. (Carnival did not respond to a written question about the measure.)

Rick Brennan, deputy director of enforcement at the U.S. Labor Department's wage and hour division in Washington, D.C., believes minimum-wage laws should apply to shipboard personnel engaged in domestic work, like cooking and cleaning rooms, when their vessel is in U.S. waters. "A cruise company that has offices in the United States and in effect meets the tests of an employer in the United States is going to have some employees covered by minimum wage and overtime [rules] in this cruise ship operation," he says, adding that he is speaking hypothetically, because the Labor Department has received no complaints regarding this issue and has therefore not investigated.

The issue comes down to the definition of seaman in the Fair Labor Standards Act, Brennan says. The law allows Carnival and others to ignore U.S. minimum wage and overtime rules for many of its shipboard personnel, most of the time. But it doesn't always allow such brazenness. "Only the seamen (those involved in navigation or supporting navigators) on a [foreign-flagged] vessel literally come within the scope of that exemption," Brennan emphasizes. Bellhops, busboys, and most cooks, therefore, are not covered. "Employees there for the convenience and leisure activities of the paying customers," Brennan adds, "should be viewed under the wage-hour law as any other employee entitled to minimum wage and overtime for the period that they would be in the United States."

Bob Jarvis is not surprised at the Labor Department's interpretation. "There's this feeling that Carnival and other foreign-flagged cruise ship companies that really derive almost all of their revenue from American passengers are not playing fair, because they are not subject to the same U.S. laws that other U.S. companies are subject to," he says. "I think the Labor Department has always been interested in finding ways to make the cruise ship industry toe the line and have the same sort of obligations that other companies in this country have."

Yet Jarvis believes Labor Department lawyers would be reluctant to pursue a case unless Congress passes legislation like the Clay bill. Why? Because Carnival lawyers would sue, and the U.S. Supreme Court would back them up, he predicts. "I think the court would say, 'It's not our job to figure that out, it's Congress's job.' They would point to the Clay bill. They would say, 'Look, this issue was in front of Congress very recently, Congress decided the law was fine the way it was and didn't change it. So if Congress doesn't think the law should be changed, who are we to think it should be changed?'"

Although the Supreme Court has never considered the issue of wage and hour rules for this special breed of laborers, it has decided cases involving compensation for injured cruise ship workers. In a 1969 decision the court upheld the right of injured seafarers to sue their American employers in U.S. courts, even if the ship in question is foreign flagged. The ruling has been upheld several times since.

One thing is clear: Carnival's itineraries ensure its vessels spend little time in U.S. territory before heading out to sea. For example Destiny arrives at the Port of Miami at 8:00 a.m. on Sunday and departs at 4:00 p.m. Receiving the U.S. minimum wage just one day per week would increase a cruise ship worker's income about $45 per month, which would be enough to feed one of Jacques or François's unemployed relatives for several weeks.

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