By Daniel Wiessner

Jan 16 (Reuters) - A U.S. appeals court on Thursday upheld rulings requiring private prison operator GEO Group GEO.N to pay more than $23 million to the state of Washington and hundreds of immigrant detainees who were paid $1 a day to participate in a work program.

The San Francisco-based 9th U.S. Circuit Court of Appeals in a 2-1 decision said that while GEO operates a Tacoma, Washington, detention center under a contract with U.S. Immigration and Customs Enforcement, it does not enjoy the immunity from state minimum wage laws afforded to the federal government.

GEO was appealing a $17.3 million jury verdict for detainees who were paid $1 a day to cook, clean, perform repairs, and staff a barber shop and library at the detention center, and a separate $6 million award for the state. Washington had sued GEO for unjust enrichment for not paying detainees the minimum wage.

The Washington Supreme Court, in response to certified questions from the 9th Circuit, ruled in 2023 that the detainees were GEO's employees under state law and had to be paid the minimum wage. That left the federal court to consider GEO's claim that because it was operating a government detention center, it was shielded from state wage laws just like the federal government.

The 9th Circuit on Thursday said the government did not dictate the wages GEO must pay to detainees or require it to operate the work program and also rejected the company's claim that the state minimum wage was preempted by federal immigration law.

"There is nothing — either in federal law or in GEO’s contract with the federal government — that prevents GEO from paying Washington’s minimum wage to its civil detainees who perform work for the benefit of GEO," Circuit Judge William Fletcher wrote.

Florida-based GEO Group in a statement said it disagreed with the decision "and will continue to vigorously pursue all available appeals of this ruling.”

Washington Attorney General Nick Brown, a Democrat, in a statement said the decision makes clear that for-profit businesses must comply with state employment laws.

A group of detainees sued GEO in Tacoma, Washington, federal court in 2017 and the case was consolidated with the state's lawsuit filed later that year.

U.S. District Judge Robert Bryan in Tacoma held a trial in the case in 2021 - the first in a federal court to be held virtually during the COVID-19 pandemic - and upheld the jury's verdict in favor of the detainees while also siding with the state in a bench ruling.

The Washington Supreme Court in its 2023 decision rejected GEO's claim that an exemption in state wage law for inmates at government-run institutions applied to detainees at its facility.

On Thursday, 9th Circuit Judge Mark Bennett in a dissenting opinion said applying state wage laws to contractors like GEO improperly "punishes" the federal government for its policy choice to have private companies operate detention facilities.

"That is the very definition of a state affording itself better treatment than it affords the United States," in violation of the U.S. Constitution's Supremacy Clause, wrote Bennett, who was appointed by Republican President-elect Donald Trump in his first term.

Fletcher was joined by Circuit Judge Mary Murguia. Both judges were appointed by Democratic presidents.

The case is Nwauzor v. GEO Group Inc, 9th U.S. Circuit Court of Appeals, No. 21-36024.

For the plaintiffs: Jennifer Bennett of Gupta Wessler

For the state: Marsha Chien of the Washington Attorney General's Office

For GEO Group: Michael Kirk of Cooper & Kirk

Read more:

GEO Group must pay minimum wage to immigrant detainees, court rules

GEO Group appeal over $1-a-day detainee pay sent to Wash. top court

GEO Group can't nix $17.3 mln award in $1-a-day detainee pay case

Jury says GEO Group must pay minimum wage to immigrant detainees

GEO Group can't avoid virtual trial in class action over dollar-a-day detainee pay

Immigrant detainees not owed minimum wage under FLSA- 4th Circuit

(Reporting by Daniel Wiessner in Albany, New York)