There’s one superpower you probably didn’t know the DOL even had.
It’s the ability to seize your inventory in a single bound if the agency believes you’ve violated FLSA’s wage-and-hour laws.
It’s called the “hot goods” provision, and you likely haven’t heard about it because the DOL’s been reluctant to unveil its secret weapon — until recently.
The provision is part of the FLSA, and under it
“… the Department of Labor can seek a court order to prevent the interstate shipment of goods that were produced in violation of the minimum wage, overtime, or child labor provisions of the FLSA.”
Guilty until proven innocent?
Now here’s the kicker: Despite the phrase “that were produced in violation of … ,” the DOL can apparently invoke this ability before proving any FLSA violations even exist.
Example: The DOL recently stopped a group of Oregon blueberry growers from sending millions of dollars in blueberries to market when it suspected the farmers were using a “ghost picker” scheme to pay it’s workers less than the minimum wage.
The DOL alleged that a picker could only pick so many berries in a day. And since, in the DOL’s estimation, a larger amount of berries had been picked than the number of reported workers could account for, the growers must have been using off-the-books pickers.
The growers, however, claimed the DOL’s figures on how much a single worker could pick were formulated via guesswork and extremely inaccurate. (To disprove the claims, a grower even hired an investigator to test the DOL’s theory. He allegedly had workers pick berries on a field that had already been picked, and those pickers were able to pick well over the DOL’s estimated amounts).
Still, after seizing it’s crops, the agency told the pickers that the crop couldn’t be released until the growers paid $240,000 in back pay and penalties — or the DOL had completed its investigation and levied any appropriate monetary penalties against the growers for any violations found.
Faced with the prospect of losing millions in crops, the growers agreed to fork over the $240,000.
Actions labeled as “extortion,” “fraud”
The following year, with the Oregon Farm Bureau at their backs, the growers challenged the DOL’s actions in court.
They claimed the DOL’s tactics of seizing their goods until they shelled out $240,000 in back pay and penalties amounted to “extortion.”
U.S. District Judge Thomas Coffin agreed. He said the DOL “unfairly stacked the deck” against the growers.
Coffin wrote in his ruling:
“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 defendant’s from having their day in court.”
Then, in a ruling upholding Coffin’s decision, U.S. District Judge Michael McShane said the DOL’s actions amounted to “fraud.”
“It was the specific manner in which the plaintiff used the “hot goods objection” in this instance, as opposed to the general use of the “hot goods objection” as to perishable goods, that constituted fraud under rule 60(b)(3).”
Result: The DOL was ordered to pay back what it had collected from the growers.
In response, the agency said it would file new charges against the growers.
Shortly thereafter, however, the DOL had a change of heart and decided to drop the case (some believe this may have been the result of the GOP taking over Congress and potentially removing the DOL’s “hot goods” power had the case dragged on).
The agency not only ended up issuing the court-ordered payback, it also threw in an additional $30,000 to each grower to make the case go away.
Is this the end of ‘hot goods’?
So what now? Will the in-court smack down the agency suffered result in the DOL putting its “hot goods” powers back in the closet?
Don’t bet on it. Read the judges’ comments carefully and you see that they didn’t necessarily take issue with the powers themselves, just the specific circumstances under which the DOL used them against the growers.
For proof the DOL isn’t planning to shelve its “hot goods” powers, look no further than its website. It just posted a Fact Sheet detailing the “hot goods” provision.
It outlines just how far-reaching the DOL’s powers are.
It says the goods that the agency can essentially seize include:
- “manufactured goods”
- “agricultural goods,” or
- “any other product sold or shipped in interstate commerce.”
The Fact Sheet’s a clear shot across employers’ bow — and highlights that the DOL can and will use the provision when it chooses.
Cite: Perez v. Pan-American Berry Growers LLC