A majority of attention paid to federal agency overreach in the labor policy arena during the Obama administration has focused on National Labor Relations Board actions, and for good reason. But the Department of Labor also has a penchant for excessive enforcement and overstepping its authority.
Part of the DOL’s mission is to ensure employers comply with the Fair Labor Standards Act, which includes minimum wage and record-keeping laws. Under the Obama administration, stringently enforcing the FLSA has been a priority as numerous statements and initiatives put forth by Secretary of Labor Thomas Perez attest, in addition to the employment of 1,100 DOL government investigators whose job is to aggressively target businesses that purportedly fail to meet FLSA standards.
However, the DOL, in certain cases, has taken their mission a little too far. For instance, in 2012, a few of those DOL investigators informed a couple of Oregon blueberry farmers that they had possibly violated several wage and hour standards and issued a “hot goods” objection. Primarily, the DOL alleged that the blueberry farmers had not properly payed its fruit pickers for their services.
So, before taking the farmers to trial and finding them guilty, the DOL hastily invoked the “hot goods” provision under the FLSA that “prohibits the shipment, offer for shipment, or sale in interstate commerce, of any goods produced in violation of the minimum wage, overtime pay, child labor or special minimum wage provisions. In the absence of an employer voluntarily correcting the violations, the Wage and Hour Division may seek to restrain the shipment of the goods.”
As The Oregonian reported at the time, the growers could let millions of dollars worth of blueberries spoil or “pay a fine and back wages and sign a consent judgment admitting wrong and agreeing not to contest the order even if subsequent information exonerated the farms.”
As almost any businessman would do, the farmers signed the consent agreement in order to avoid the financial losses from letting their crops rot. Further, the DOL required the farmers pay $240,000 in fines and back wages.
One of the farm owners, Greg Ditchen, compared the DOL action to “extortion.” Within a year of paying the fines and signing the consent agreement, the farmers sued the DOL for violating their right to due process.
In 2014, U.S. District judge Thomas Coffin confirmed Mr. Ditchen’s contention that DOL engaged in economic coercion. In the ruling Coffin wrote:
Although the government’s use of the hot-goods authority is authorized by statute to resolve wage-and-hour violations, applying such authority to perishable goods in this situation in effect prevented (the) defendants from having their day in court.
To avoid the potential loss of millions of dollars worth of berries, defendants had to agree to the Department of Labor’s allegations without an opportunity to present a defense or confront the DOL’s evidence in an administrative or court hearing.
In addition, Coffin’s decision notes the DOL’s departure from common practices regarding “hot goods” objections with respect to perishable goods and the coercive nature of the DOL’s actions against the blueberry farmers.
Normally, when the DOL hands out a “hot goods” objection, it allows the violator to place the back wages and fines in escrow “to allow the hot goods objection to be lifted while the violations are litigated. However, the defendants were caught off guard in these cases when the DOL changed its tactics and insisted on a consent decree before lifting the objections.”
The worst part of the DOL action is that it had no proof that the violations actually occurred and consistently refused to share information about its methodology that found the employers in violation. Unfortunately, this did not stop the agency from dragging the blueberry farmers’ namea through the mud, penalizing and forcing them to admit wrongdoing. As Coffin’s decision emphasizes and the central Oregon newspaper, The Bulletin, editorialized:
Do you know how the department determined some of the alleged labor violations? It guessed [emphasis added].
It determined that a picker could pick only a certain amount of blueberries in a day. One farm hired a former Labor Department investigator to test that theory. He had workers pick blueberries on a field that had already been picked, and many picked well over that amount.
Finally, this January, justice prevailed and a settlement was agreed upon where the DOL fully reimbursed the farmers plus additional $30,000 to each defendant as well as drop all lawsuits against the defendants.
Hopefully, in the new session of Congress, Rep. Kurt Schrader’s (D-Ore.) bill that would curtail the DOL’s authority to issue hot goods objections related to perishable goods will receive bipartisan support and pass.
In a press release sent by Rep. Schrader’s office yesterday that commends the settlement, he hits the nail on the head:
This is an issue about basic fairness and due process under the law. The Courts have spoken and made it abundantly clear that the Department of Labor grossly overstepped with its coercive tactics threatening the use of ‘hot goods’ orders against these Oregon farmers…This settlement is long-overdue and finally brings some well-deserved justice for Oregon’s agriculture community that was being bullied by the federal government. I want to praise these Oregon farmers who had the courage to challenge the actions of the DOL. I know they are grateful to have their good names back and I want to reiterate my commitment to fixing the law so the Department of Labor can’t threaten or apply a hot goods order to perishable agriculture commodities in the future.