[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
HEARING TO REVIEW THE IMPACT OF
ENFORCEMENT ACTIVITIES BY THE
DEPARTMENT OF LABOR ON SPECIALTY
CROP GROWERS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HORTICULTURE, RESEARCH, BIOTECHNOLOGY, AND FOREIGN
AGRICULTURE
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JULY 30, 2014
__________
Serial No. 113-20
Printed for the use of the Committee on Agriculture
agriculture.house.gov
______
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COMMITTEE ON AGRICULTURE
FRANK D. LUCAS, Oklahoma, Chairman
BOB GOODLATTE, Virginia, COLLIN C. PETERSON, Minnesota,
Vice Chairman Ranking Minority Member
STEVE KING, Iowa MIKE McINTYRE, North Carolina
RANDY NEUGEBAUER, Texas DAVID SCOTT, Georgia
MIKE ROGERS, Alabama JIM COSTA, California
K. MICHAEL CONAWAY, Texas TIMOTHY J. WALZ, Minnesota
GLENN THOMPSON, Pennsylvania KURT SCHRADER, Oregon
BOB GIBBS, Ohio MARCIA L. FUDGE, Ohio
AUSTIN SCOTT, Georgia JAMES P. McGOVERN, Massachusetts
SCOTT R. TIPTON, Colorado SUZAN K. DelBENE, Washington
ERIC A. ``RICK'' CRAWFORD, Arkansas GLORIA NEGRETE McLEOD, California
SCOTT DesJARLAIS, Tennessee FILEMON VELA, Texas
CHRISTOPHER P. GIBSON, New York MICHELLE LUJAN GRISHAM, New Mexico
VICKY HARTZLER, Missouri ANN M. KUSTER, New Hampshire
REID J. RIBBLE, Wisconsin RICHARD M. NOLAN, Minnesota
KRISTI L. NOEM, South Dakota PETE P. GALLEGO, Texas
DAN BENISHEK, Michigan WILLIAM L. ENYART, Illinois
JEFF DENHAM, California JUAN VARGAS, California
STEPHEN LEE FINCHER, Tennessee CHERI BUSTOS, Illinois
DOUG LaMALFA, California SEAN PATRICK MALONEY, New York
RICHARD HUDSON, North Carolina JOE COURTNEY, Connecticut
RODNEY DAVIS, Illinois JOHN GARAMENDI, California
CHRIS COLLINS, New York
TED S. YOHO, Florida
VANCE M. McALLISTER, Louisiana
______
Nicole Scott, Staff Director
Kevin J. Kramp, Chief Counsel
Tamara Hinton, Communications Director
Robert L. Larew, Minority Staff Director
______
Subcommittee on Horticulture, Research, Biotechnology, and Foreign
Agriculture
AUSTIN SCOTT, Georgia, Chairman
VICKY HARTZLER, Missouri KURT SCHRADER, Oregon, Ranking
JEFF DENHAM, California Minority Member
STEPHEN LEE FINCHER, Tennessee SUZAN K. DelBENE, Washington
DOUG LaMALFA, California JIM COSTA, California
RODNEY DAVIS, Illinois MARCIA L. FUDGE, Ohio
CHRIS COLLINS, New York ANN M. KUSTER, New Hampshire
TED S. YOHO, Florida JUAN VARGAS, California
SEAN PATRICK MALONEY, New York
(ii)
C O N T E N T S
----------
Page
Schrader, Hon. Kurt, a Representative in Congress from Oregon,
opening statement.............................................. 4
Scott, Hon. Austin, a Representative in Congress from Georgia,
opening statement.............................................. 1
Prepared statement........................................... 3
Witnesses
Weil, Ph.D., David, Administrator, Wage and Hour Division, U.S.
Department of Labor, Washington, D.C........................... 7
Prepared statement........................................... 9
Supplementary information.................................... 43
Submitted questions.......................................... 46
Avakian, Hon. Brad, Commissioner, Oregon Bureau of Labor and
Industries, Portland, OR....................................... 13
Prepared statement........................................... 15
Submitted questions.......................................... 48
Submitted Material
Walden, Hon. Greg, a Representative in Congress from Oregon,
submitted statement............................................ 41
HEARING TO REVIEW THE IMPACT OF
ENFORCEMENT ACTIVITIES BY THE
DEPARTMENT OF LABOR ON SPECIALTY
CROP GROWERS
----------
WEDNESDAY, JULY 30, 2014
House of Representatives,
Subcommittee on Horticulture, Research, Biotechnology, and
Foreign Agriculture,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:01 a.m., in
Room 1300, Longworth House Office Building, Hon. Austin Scott
[Chairman of the Subcommittee] presiding.
Members present: Representatives Scott, Hartzler, Yoho,
LaMalfa, Schrader, DelBene, Kuster, and Costa.
Staff present: John Goldberg, Josh Mathis, Kevin Kramp,
Mary Nowak, Nicole Scott, Tamara Hinton, Keith Jones, and Liz
Friedlander.
OPENING STATEMENT OF HON. AUSTIN SCOTT, A REPRESENTATIVE IN
CONGRESS FROM GEORGIA
The Chairman. Good morning. This hearing of the
Subcommittee on Horticulture, Research, Biotechnology, and
Foreign Agriculture to review the impact of enforcement
activities by the Department of Labor on specialty crop
growers, will come to order.
I am going to read an opening statement followed by my
colleague Mr. Schrader, from Oregon. And again, I would like to
thank you all for being here today to discuss an issue that has
become an increasingly difficult challenge for farmers in their
day-to-day operations. The purpose of today's hearing, of the
Subcommittee on Horticulture, Research, Biotechnology, and
Foreign Agriculture, is to address the growing concern of the
Department of Labor's use of the so-called hot goods provision
under the Fair Labor Standards Act of 1938.
The original purpose of this provision which, again, was
written in 1938 was to protect workers from poor working
conditions and negligible employers. Let me be clear, neither I
nor anyone else on this Committee condones violations in regard
to the Fair Labor Standards Act in any way. We believe it is
important to provide fair wages for agricultural workers yet
this law was not intended for use with regards to fresh fruits
and vegetables which perish more easily than a manufactured
good.
That said, we are aware of multiple and effective tools
that the Department of Labor can use without having to resort
to their discretionary authority under the hot goods provision.
To be clear, the Labor Department has authority to compel
specialty crop producers and packers to reimburse workers when
wages fall short of the minimum wage requirement without using
the hot goods provision.
This issue that we will discuss today is the Department of
Labor's abuse of this discretion when applying hot goods
provision to perishable agricultural commodities. In these
cases, producers are not only liable for civil fines and back
wages to workers, but the fines and penalties pale in
comparison to the economic damages brought about by the
Department of Labor's destruction of their crops.
The Department does not set fire to these crops, but they
do create a scenario under which the crops would naturally
perish. The Department relayed to us that they used this
provision sparingly in the past. What they have failed to
acknowledge is the inexcusable use of a tool which Congress
never granted or intended; that is, the tool of fear, and
intimidation.
The Department has used this fear far too often to extort
concessions from producers with little, if any, proof of
wrongdoing. This Committee recognizes the importance, ``to
assure work-related benefits and rights'' as the Department's
mission statement refers. I hope we all would agree that these
rights are not only established in law, but in the fabric of
the rights guaranteed to us in our Constitution.
The Department's actions are so intrusive that they
threaten the ability of employees to enjoy these rights by
extorting employers into bankruptcy and closure. We fear that
this is the direction the Department is pursuing regarding
berry producers in the Pacific Northwest. In at least one of
these cases, the producer courageously chose to fight this
rogue agency, and prevailed in Federal Court against the
Department, where the Department of Labor was found to have
forced the producer to admit guilt under duress.
We find ourselves in a situation where the Department is
attempting to intimidate this producer by using what it
believes to be the apparently inexhaustible supply of taxpayer
funds to bankrupt this producer through a seemingly endless
appeals process in the courts. And what has not been
adjudicated is the original claim by the Department of Labor
that the producer had more than 1,300 so-called ghost workers
who never received compensation. Thirteen hundred workers would
be like having the entire high school, where I graduated, in
the field.
Where did this claim come from? What proof does the
Department have? How many of these ghost workers have come
forward? By last count a mere 72 have come forward. Rather than
acknowledge the arbitrary nature of the Department of Labor's
accusations regarding this farmer, this rogue agency will
instead argue that the problem is with the workers and the
farmers and not their methodology. I think it is clear that the
problem is with the agency. Although this case is specific to a
certain region, the Committee is convinced that without proper
examination of the Department of Labor's actions the pervasive
nature of these actions will begin to affect farmers
nationwide. In fact, in my state, in Georgia, producers have
reported to my office that although a hot goods order has not
been used, it has been threatened several times.
In examining the inexcusable nature of the Department's
actions and the arbitrary nature of its evaluation methods, I
hope that we can gain a greater understanding of this
escalating threat and the avenues for remedy.
Before us today are two witnesses. Dr. David Weil is the
Administrator of the Wage an Hour Division of the U.S.
Department of Labor and Mr. Brad Avakian, is the Commissioner
of the Oregon Bureau of Labor and Industries. Gentlemen, we
look forward to both of your testimony.
[The prepared statement of Mr. Scott follows:]
Prepared Statement of Hon. Austin Scott, a Representative in Congress
from Georgia
Good morning.
Thank you all for being here today to discuss an issue that has
become an increasingly difficult challenge for farmers in their day-to-
day operations.
The purpose of today's hearing of the Subcommittee on Horticulture,
Research, Biotechnology, and Foreign Agriculture is to address the
growing concern of the Department of Labor's (DOL) use of the so-called
``Hot Goods'' Provision under the Fair Labor Standards Act of 1938
(FLSA).
The original purpose of this provision, which again was written in
1938, was to protect workers from poor working conditions and
negligible employers. Let me be clear, neither I nor anyone else on
this Committee condones violations in regards to FLSA, in any way. We
believe it is important to provide fair wages for agricultural workers.
Yet, this law was not intended for use with regards to fresh fruits and
vegetables, which perish more easily than a manufactured good. That
said, we are aware of multiple and effective tools the Department of
Labor can use without having to resort to their discretionary authority
under the ``hot goods'' provision. To be clear, the Labor Department
has authority to compel specialty crop producers and packers to
reimburse workers when wages fall short of the minimum wage requirement
WITHOUT using the hot goods provision. The issue we will discuss today
is the Department of Labor's abuse of this discretion when applying the
hot goods provision to perishable agricultural commodities. In these
cases, producers are not only liable for civil fines and back wages to
workers, but the fines and penalties pale in comparison to the economic
damages brought about by the Department of Labor destroying their
crops. The Department does not set fire to these crops. They just
create a scenario where the crops naturally perish.
The Department relayed to us that they used this provision
sparingly in the past. What they have failed to acknowledge is the
inexcusable use of a tool which Congress has never granted or
intended--the tool of fear and intimidation. The Department has used
this tool far too often to extort concessions from producers with
little if any proof of wrong doing.
This Committee recognizes the importance, ``to assure work-related
benefits and rights'' as the Department's mission statement refers. I
hope we all would agree that these rights are not only established in
law but in the fabric of the rights guaranteed to us in our
Constitution. Yet, the Department's actions are so intrusive they
threaten the ability of employees to enjoy these rights by extorting
employers into bankruptcy and closure. We fear that this is the
direction the Department is pursuing regarding berry producers in the
Pacific Northwest. In at least one of these cases, the producer
courageously chose to fight this rogue agency and prevailed in Federal
court against the Department, where the Department of Labor was found
to have forced the producer to admit guilt under duress. Now we find
ourselves in a situation where the Department is attempting to
intimidate this producer by using what it believes to be the apparently
inexhaustible supply of taxpayer dollars to bankrupt this producer
through a seemingly endless appeals process.
Yet, what has not yet been adjudicated is the original claim by the
Department of Labor that the producer had more than 1,300 ``ghost
workers'' who never received compensation. Thirteen hundred workers
would be like having the entire high school where I graduated in the
field. Where did this claim come from? What proof does the Department
have? How many of these ``ghost workers'' have come forward? By last
count, a mere 72 ``ghost workers'' have come forward. Rather than
acknowledge the arbitrary nature of the Department of Labor's
accusations regarding this farmer, this rogue agency will instead argue
that the problem is with the workers and the farmers and not with their
methodology. I think it is clear that the problem is with the agency.
Although this case is specific to a certain region, the Committee
is convinced that without proper examination of the Department of
Labor's actions, the pervasive nature of these actions will begin to
affect farmers nationwide. In fact, in my state of Georgia, producers
have reported to my office that all though a ``hot goods'' order has
not been used, it has been threatened several times.
By examining the inexcusable nature of the Department's actions and
the arbitrary nature of its evaluation methods, I hope we can gain a
greater understanding of this escalating threat and the avenues for
remedy.
Before us today are two witnesses.
Dr. David Weil is the Administrator of the Wage and Hour Division
of the U.S. Department of Labor and Mr. Brad Avakian is the
Commissioner for the Oregon Bureau of Labor and Industries. Gentlemen,
we look forward to both your testimony. I know recognize my colleague,
Mr. Schrader for any opening comments he may have.
The Chairman. I now recognize my colleague, Mr. Schrader,
for any opening statement he may have.
STATEMENT OF HON. KURT SCHRADER, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF OREGON
Mr. Schrader. Thank you, Chairman Scott, I appreciate
having this hearing today. I think it is extremely important.
I want to thank Dr. Weil and Commissioner Avakian for
coming before the Committee so we hopefully can better
understand these enforcement actions that have occurred on our
Oregon farms.
The Department of Labor has, frankly, continued to use, as
you outlined, this hot goods provision despite the fact that a
Federal Court has determined that this action in perishable
products on farms is coercive in nature. That conclusion is
very troubling to me, and should be troubling to everyone here.
It is the reason we are taking the actions today.
I want to provide some background, and context for today's
hearing. Originally passed as a part of the New Deal, as
Chairman Scott alluded, the Fair Labor Standards Act was
intended to protect American workers and to stimulate the
economy. The FLSA established the Department of Labor's Wage
and Hour Division to ensure that workers are fairly compensated
for their labor and to prevent the scourge of child labor. The
FLSA continues to play an important role in protecting American
workers and children from unscrupulous workplace practices, as
it should. Illegally employing children or not fully
compensating workers for their labor, is not condoned by
anybody.
However, my support for the FLSA should not be construed to
represent any support of the recent actions taken by the
Department of Labor. In the summer of 2012, the Department of
Labor used a provision within the FLSA, the so-called hot goods
provision, to quarantine and confiscate Oregon farmers'
perishable products, thereby imperiling and threatening their
very livelihood. In taking the actions it did, DOL ignored its
own historical precedent, violated Constitutionally protected
due process, and subjected family farms to crushing economic
harm in these very tough times.
Since the summer of 2012, I have been working diligently
with Members of the Oregon Delegation and this Committee, to
gather data from DOL on these enforcement actions and the
utilization of the hot goods provision as a tool against
agricultural Wage and Hour violations. I can firmly say over
the last 2 years, I have been severely disappointed.
Let me give you one example: The Department of Labor has
repeatedly told my office that comprehensive data on the
historical use of the hot goods provisions is unavailable. Yet,
the Congressional Research Service, found very quickly and very
clearly that the first such application of hot goods authority
to perishable agricultural products occurred in the last few
years since 2008. That is 70 years, folks, 70 years. It has
also become crystal clear to me that the Department of Labor
has been goaded by outside special interest groups in the last
few years to use this hot goods authority without any regard to
the unique application in the agricultural sector.
Furthermore, the actions taken in Oregon were done with
complete disregard to Constitutionally protected due process
under the 5th and 14th Amendments. Historically, Department of
Labor investigations and its process for adjudicating
violations of Fair Labor Standards usually followed a couple of
key principles. First, when all of the fact finding steps were
completed, the employer or the employer's representative will
be told whether violations have occurred and if so, what the
violations are, and how to correct them. If back wages are
owed, the employer will be asked to pay the back wages. Only in
the absence of an employer voluntarily doing so, did the Wage
and Hour Division seek to restrain the shipment of goods.
This Department of Labor policy clearly understands that
employers should be given the opportunity to work with the DOL
inspectors to correct the violations and pay back wages before
the threat of a hot goods objection. Application of the hot
goods provision, however, has different impacts in different
sectors. The Chairman alluded to that. Textiles, durable goods,
even processed or frozen foods can sit idle in the supply chain
for weeks or months on end without having their market values
compromised. The same simply cannot be said for blueberries or
other perishable ag commodities, the value of which can
seriously decline in a matter of days.
In the case of one of my constituents, in addition to the
almost $170,000 in fines and alleged back wages paid directly
to the Department of Labor, he lost another $90,000 in revenue
based on rotting berries during the imposition of the hot goods
objection. When improperly used in the perishable ag sector,
the threat of hot goods objection becomes coercive. As millions
of dollars of blueberries sat idle in this supply chain, my
constituents were forced to make a business decision: Meet the
Department of Labor demands, sign a consent judgment, waive
their rights to contest the allegations, pay substantial fines,
or lose their crops and potentially their farm.
As the Department of Labor continues to defend this
coercive action, it is important for everyone in the room to
understand that all of this was done before the farmers were
even informed about the specific charges they faced. That is
just not right. The consent judgments that my constituents
ultimately signed to remedy the alleged violations did not
include any administrative review process, as I outlined
before. These farmers had never even previously been cited for
Wage and Hour violation before the Department of Labor jumped
to its drastic and draconian action. But, when I had talked to
the DOL staff in Washington, D.C., I was assured that it was
only used as a last resort, and only on repeat offenders.
Obviously, the Department did not follow its own policies.
Fortunately, two of these farmers decided to fight this case in
court. I am going to read a section here, with the chair's
permission, on what the court found:
``While the defendants were aware of the coercive
nature utilized by the DOL [Department of Labor] at the
time the consent judgments were entered, the nature of
their operations combined with DOL's [Department of
Labor's] departure from its previous course of conduct
in using the hot goods objection with respect to
perishable goods complicated defendants' analysis of
how to proceed in challenging the DOL [Department of
Labor] and the judgments it obtained.
``The DOL [Department of Labor] had previously
allowed an alleged violator to place the proposed back
wages and penalty into escrow to allow the hot goods
objection to be lifted while the violations were
litigated. However, the defendants were caught off
guard in these cases when the DOL [Department of Labor]
changed its tactics and insisted on a consent decree
before lifting the objections. While the proposed back
wages and penalty were substantial, the potential
losses due to a continuing hot goods objection pending
litigation dwarfed the proposed judgments' impact on
defendants. The defendants, as discussed below, were
left with no choice but to accept the judgments.
Moreover, given the DOL's [Department of Labor's] new
posture it is not inconceivable that mounting an attack
on the judgment, without further information, could
have had uncertain repercussions for the defendants in
any future interactions with the DOL [Department of
Labor] in view of its more aggressive tactics. . . .
``It could be argued, as suggested above, that
defendants could have sought a TRO [temporary
restraining order] to lift the hot goods objections and
permit review ofthe DOL's [Department of Labor's]
assessment. . . .
``However, the DOL's [Department of Labor's]
imposition of the hot goods objection to highly
perishable goods and requirement of immediate admission
of defeat without any recourse to the courts unfairly
stacked the deck against the Ditchens and Pan-American.
Given the nature of the business in which defendants
engaged, it is not difficult to understand why they
would conclude that resort to such options without
further information would be extremely risky given the
potential staggering economic losses. Moreover, this
court can think of no good reason in support of the
DOL's decision to refuse the accommodation of having
defendants place the penalties and wages at issue in
escrow as a condition of lifting the hot goods
objection pending administrative and court review.
Given the economic duress placed upon defendants in
order to secure the consent judgments, the judgments
should be vacated . . .''
That is pretty strong condemnation language by the court.
To me, the Department of Labor is overzealous, and its
inappropriate use, in my opinion, of this hot goods authority
on Oregon farmers was completely uncalled for. It has led
Chairman Scott and I to introduce H.R. 1387 that clarifies the
law on this issue. This simple piece of legislation states that
the Department of Labor can continue to use hot goods objection
on any product other than perishable agricultural commodities.
That is very consistent, I believe, with the original law and
its intent.
If the Department of Labor continues it inappropriate use
of the hot goods provision, farmers' livelihoods are going to
be seriously jeopardized across this country. To say I remain
troubled regarding how the Department of Labor has pursued the
hot goods provision, and its lack of cooperation as we have
tried to get a better understanding of the ``whys'' and
``hows'' is an understatement.
The Department of Labor, as I have said, did not follow any
appropriate process as set out by its own rules. They used
faulty methodology in coming to its findings. They coerced
farmers into forfeiting their rights by threatening their very
livelihoods. They have denied American farmers, my fellow
Oregonians, the very due process our Forefathers built our
country on, and undermined their faith in their government.
That is a sad commentary on the agency's performance.
I yield back, Mr. Chairman.
The Chairman. Thank you, Mr. Schrader.
The chair would request that Members submit any opening
statements that they may have for the record so that the
witnesses may begin their testimony and assure there is ample
time for questions. I do expect us to have at least two rounds
of questions today.
I would like to welcome our panel of witnesses to the
table. We have two witnesses today, the first is Dr. David
Weil, and the second is Mr. Brad Avakian.
Dr. Weil, please begin when you are ready.
STATEMENT OF DAVID WEIL, Ph.D., ADMINISTRATOR, WAGE AND HOUR
DIVISION, U.S. DEPARTMENT OF LABOR,
WASHINGTON, D.C.
Dr. Weil. Thank you, and good morning, Chairman Scott,
Ranking Member Schrader, and Members of the Subcommittee.
Thank you for the invitation to testify at this hearing on
the Fair Labor Standards Act's hot goods provision, an
important tool that we use carefully and appropriately.
Mr. Chairman, I want to assure you that the Department of
Labor and its Wage and Hour Division that I proudly lead
recognize the importance of the U.S. agricultural industry and
the critical role it plays in not only putting food on our
tables, but also creating jobs and helping our economy to
prosper. The Wage and Hour Division's work is critical to
ensuring a level playing field for the vast majority of
businesses who play by the rules and in protecting the rights
and working conditions of agricultural workers.
All told, between Fiscal Year 2009 and 2013, Wage and Hour
concluded nearly 7,500 agricultural investigations, collecting
more than $20 million in back wages for more than 46,600
agricultural workers. The FLSA was born during a time of great
economic suffering when the Great Depression touched every
corner of this nation. Congress included in the Act language
commonly referred to as the hot goods provision, the basic
purpose of which is to exclude from interstate commerce goods
produced in violation of the statute's minimum wage, overtime,
and child labor provisions.
In encouraging Congress to adopt the hot goods provision,
President Roosevelt outlined its objectives stating, ``So to
protect the fundamental interests of free labor and free
people, goods produced under conditions which do not meet
rudimentary standards of decency should be regarded as
contraband and ought not to be allowed to pollute the channels
of interstate trade.''
Congress crafted the hot goods provision to apply
expansively to all goods. Courts have upheld our use of this
provision many times in the context of preventing the illegal
shipment of tainted goods in agriculture, garment, and many
other industries. We know that the majority of employers are
doing right by their workers and the law, but we continue to
find violations impacting the wages and working conditions of
some of our country's most vulnerable workers. In a majority of
cases, Wage and Hour is able to reach a resolution with
employers by working together. Occasionally, we do uncover
labor violations that necessitate the use of the hot goods
provision in order to obtain remedies for the affected workers,
and protect the stream of commerce and responsible producers.
The hot goods provision is only one of several tools
available to Wage and Hour and while not a tool we use
frequently, it has been an important part of our enforcement
program since the Fair Labor Standards Act was enacted. We also
know that the provision is a strong tool and accordingly, we
have created careful procedures regarding when and how to use
it. But it is also important to understand that we use our
enforcement tools in conjunction with other methods of
increasing compliance. Wage and Hour continues to recognize
that enforcement alone will never be sufficient to achieve the
agency's mission.
Education and outreach to the employer community to provide
and promote voluntary compliance has been and will continue to
be one of our key strategies for promoting sustained and
industry-wide compliance. This has been particularly important
in the agricultural context where since Fiscal Year 2009 Wage
and Hour has conducted nearly 600 outreach events and
presentations that were specifically geared to providing
valuable information and compliance assistance to the
agricultural industry.
I want to briefly share a success story that illustrates
this integrated approach. Wage and Hour began investigations in
New Jersey, North Carolina, and Michigan during the 2009
harvest season and uncovered systemic labor violations among
blueberries growers and farm labor contractors, including the
illegal employment of children. In addition to recovering
several thousand dollars in back wages and assessing penalties,
Wage and Hour undertook a comprehensive approach to ending
these practices.
Before the 2010 harvest was to begin, our offices in these
three states took proactive steps to ensure compliance with
agricultural standards by conducting outreach to employers. We
met with farmers, farm labor contractors, and industry
associations to provide them with meaningful compliance
assistance. The following year employers took important steps
to ensure that children were not working in the fields. No
child labor violations were found in the subsequent year in
North Carolina, and New Jersey, and only one farm in Michigan
had those violations.
This is truly a win/win for everybody, and a great example
of how our efforts are aimed at helping farms and farm workers
prosper together. In enacting the Fair Labor Standards Act,
Congress acknowledged the inherent competitive nature of the
market, and recognized that without strong enforcement
mechanisms, workers and employers would fall victims to ills of
unfair competition and exploitive labor practices.
When deployed carefully and in concert with other tools of
outreach and enforcement, I strongly believe we can achieve the
statutory objectives entrusted to me of providing a fair day's
pay, for a fair day's work.
Thank you again for the opportunity to testify today, and I
am happy to answer your questions.
[The prepared statement of Dr. Weil follows:]
Prepared Statement of David Weil, Ph.D., Administrator, Wage and Hour
Division, U.S. Department of Labor, Washington, D.C.
Good morning, Chairman Scott, Ranking Member Schrader, and Members
of the Subcommittee. Thank you for the invitation to testify at this
hearing on the Fair Labor Standards Act's (FLSA) ``hot goods''
provision, a statutory enforcement tool and safeguard of critical
importance to our nation's workers, businesses and economy. It is an
important tool that we use carefully and appropriately. Courts have
upheld our use of this provision many times in the context of
preventing the illegal shipment of tainted goods in many industries
including agriculture, garment, and other manufacturing, among others.
Mr. Chairman, the Department of Labor recognizes the importance of
the U.S. agricultural industry and the critical role it plays in not
only putting food on our tables but also creating jobs and helping our
nation's economy prosper.
I am pleased to be here today to talk with you about the Wage and
Hour Division's work in protecting the rights of agricultural workers
and ensuring a level playing field for the vast majority of this
industry's businesses who play by the rules.
Background
The Fair Labor Standards Act of 1938 was born during a time of
great economic suffering, when the Great Depression touched every
corner of this nation. In response to those circumstances, Congress
recognized the critical need to establish a floor of basic labor
protections, including setting minimum wage, overtime compensation, and
child labor protections for America's workers, and also the need to
level the competitive playing field for employers.
The passage of this law was an unprecedented development--one that
recognized that the establishment and enforcement of basic labor
standards are necessary for promoting the economic security of workers
and their families and for ensuring the integrity of our economy.
To advance the critical mission of the FLSA, Congress included in
the Act an explicit prohibition against the shipment and distribution
in commerce of goods that were produced in violation of the FLSA's
minimum wage, overtime or child labor requirements.
Commonly referred to as the ``hot goods'' provision of the FLSA,
15(a)(1), the basic purpose of the 15(a)(1) prohibition, as the
Supreme Court has pointed out, is to exclude from interstate commerce
goods produced under substandard labor conditions, which would compete
unfairly with goods produced by complying employers, and which in their
total effect might force complying employers out of business.
In his 1937 message to Congress, President Roosevelt urged Congress
to enact the FLSA and include in the bill the rules and legal
prohibitions necessary to accomplish the objectives of the Act. More
specifically, President Roosevelt's message identified the needs and
objectives of the hot goods prohibition: ``And so to protect the
fundamental interests of free labor and a free people we propose that
only goods which have been produced under conditions which meet the
minimum standards of free labor shall be admitted to interstate
commerce. Goods produced under conditions which do not meet rudimentary
standards of decency should be regarded as contraband and ought not to
be allowed to pollute the channels of interstate trade.''
President Roosevelt's message is cited approvingly throughout the
legislative history of the FLSA and served as strong inspiration for
passage of the Act.
Prohibiting the shipment of goods produced in violation of the FLSA
serves several fundamental statutory purposes. In addition to ensuring
that employers who violate the FLSA do not enjoy an unfair competitive
advantage over their law-abiding peers, the hot goods provision serves
to incentivize employers to adhere to the FLSA's requirements. The hot
goods provision also serves to protect the interests of those workers
who have suffered substandard working conditions during the production
of such goods.
It is also important to point out that Congress crafted the hot
goods provision to apply expansively to all goods for the purpose of
removing those tainted goods from the stream of interstate commerce.
There is no statutory exception for agricultural or perishable goods to
the hot goods provision. In fact, in today's economy, most goods can be
considered perishable if you consider the tremendous pressure upper-
tier businesses place on lower-tier suppliers to deliver goods on a
precise schedule. Be they blueberries, automobile parts, high fashion
clothing items, or consumer digital products, delay in delivery date
can be extremely costly to all parties in the supply chain.
Wage and Hour Efforts
The FLSA's passage in 1938 marked the creation of the agency I am
honored to lead, the Wage and Hour Division (WHD), whose mission is to
promote and achieve compliance with labor standards to protect and
enhance the welfare of the nation's workforce. That is, we are charged
with ensuring that working people receive a fair day's pay for a fair
day's work.
This is a critical directive in the agricultural industry where,
for more than 76 years WHD has been working hard to strengthen
compliance with Federal labor laws. We know that the majority of
employers in this industry are doing right by their workers and the
law, but we continue to find labor violations impacting the wages and
working conditions of some of our country's lowest-paid workers who,
due to a lack of knowledge of the law or a fear of exercising their
rights, are vulnerable to disparate treatment and labor violations.
The agricultural industry is the backbone of our economy, which is
supported by growers, farm labor contractors and other businesses. The
value of our nation's farms cannot be overstated, and it is in all of
our interests to ensure that farmers and workers prosper together.
That's where we come in--our job at the Wage and Hour Division is to
ensure that agricultural employers keep their workers safe on the job,
house them in safe and sanitary residential facilities, and pay them
their legally required wages. We are also committed to protecting the
interests of law-abiding employers and ensuring that they are not
placed at a competitive disadvantage by businesses that break the law.
As a law enforcement agency, we take seriously our responsibilities
to ensure compliance with the law. WHD conducts thorough inspections of
migrant housing units, transportation vehicles, employment practices
and pay records to ensure compliance with all applicable agricultural
labor standards. These enforcement efforts also include timely
compliance assistance where, for example, our investigators reach out
to agricultural employers in advance of their growing or harvest season
to remind them of their legal responsibilities and help them ensure
compliance throughout the season.
During investigations, our investigators go to great lengths to
gather accurate and sufficient evidence of an employer's level of
compliance with all applicable laws. And when violations are found, WHD
investigators work expeditiously with the employers to identify
solutions and methods for coming into compliance. We also devote time
and resources to educating employers about their responsibilities to
help them prevent future labor violations from occurring.
However, employers who refuse to comply with the law may face
appropriate action based on what we find. By conducting effective
investigations and using a variety of enforcement tools--including
civil money penalties, liquidated damages, injunctions, and other
appropriate remedies--WHD is able to bring employers into compliance
and deter future labor violations, thereby safeguarding the rights and
welfare of agricultural workers.
In a majority of agricultural cases, WHD is able to reach a
resolution with employers and we often work together to remedy the
problems. Occasionally, however, we uncover labor violations that
necessitate the use of enforcement tools like the hot goods provision
of the FLSA, in order to obtain remedies for the affected workers and
protect the stream of commerce from being adversely affected by
illegally produced goods and to make sure that responsible producers in
the agriculture supply chain are not put at a competitive disadvantage
by producers who flout the law.
The hot goods provision is one of several tools in WHD's
enforcement toolbox. And, while not a tool we use frequently, the hot
goods provision has been an important part of our enforcement program
since the FLSA was enacted.
In fact, one of our earliest hot goods enforcement actions occurred
in 1946 when the Department obtained injunctions from Federal court to
restrain vegetable packers in Mississippi from shipping their goods in
interstate commerce because the vegetable products were processed and
packed by minors, many under 14 years of age, in violation of the
FLSA's child labor provisions.
In more recent years, WHD has utilized hot goods actions in
numerous agricultural sectors all across this country:
In the 1980's for example, WHD brought hot goods actions
against sweet potato growers in North Carolina to obtain back
wages and compliance agreements from the employers.
In 1990's, WHD utilized the hot goods provision to obtain
compliance in several cases involving child labor violations.
For example, WHD sought court action against onion growers in
Texas and strawberry growers in Louisiana, who employed
children, ages 6 to 11, to pick crops, in violation of the
FLSA. The employers were prevented from shipping the ``hot''
goods until our enforcement matters were resolved. As a result,
they agreed to comply in the future, paid civil money penalties
and also signed compliance monitoring agreements with WHD.
To give a more recent example, earlier this year WHD
recovered $428,000 in back wages and damages for low-wage
workers on a Hawaiian basil farm. After uncovering egregious
minimum wage and overtime violations, the agency requested the
employer to voluntarily refrain from shipping the basil
harvested in substandard conditions to off-island customers.
The agency agreed to shipment and released its objection once
the employer agreed to come into immediate compliance and
started paying the back wages due on behalf of the affected
workers.
These are just a few examples of our decades-long commitment to
strengthening compliance in the agricultural industry through the use
of the hot goods provision of the FLSA.
Beyond the use of a particular statutory tool, WHD has become more
strategic in its efforts to strengthen labor law compliance in the
agricultural industry and keep workers safe while on the job.
WHD offices conduct strategic initiatives in industries across the
country. These initiatives include directed investigations of employers
throughout the supply chain, as well as compliance evaluations that
inform the agency of the severity and likely causes of violations. Our
initiatives also heavily focus on reaching out to employers, industry
associations, and worker advocates to engage them in dialogue and
identify strategies for addressing industry-specific problems.
This multi-pronged approach to ensuring compliance is working--our
strategic efforts are helping maximize WHD' impact and the results of
all these efforts speak volumes in the agricultural industry.
Between FY 2009 and FY2013, WHD concluded nearly 7,500 agricultural
investigations, collecting more than $20 million in back wages for more
than 40,000 workers nationwide.
These are big numbers but please allow me to underscore the gravity
of what they represent. These are real dollars and cents that were
earned through the labor of real people--many of whom are your
constituents and are also vulnerable low-wage workers. It is real money
that has enabled them to put food on the table, pay the rent, care for
their children, keep the lights on, and pay for other expenses.
Furthermore, putting rightfully earned wages back into the pockets
of working people means that they will turn around and spend it on
goods and services, stimulating our economy and helping to create new
jobs.
These numbers also represent our success in making sure that law-
abiding employers are not placed at a competitive disadvantage against
businesses that break the law. Robust and consistent enforcement of the
law is critical to leveling the playing field, creating the right
incentives and making those who comply with workplace laws stronger,
not weaker, in the marketplace.
I would like to share with you a real success story that has made a
difference in the lives of hardworking people and serves as a great
example of our strategic enforcement efforts in action.
A few years ago, WHD implemented one of the most effective,
creative, and visible farm labor enforcement programs in the
history of the agency, focusing on agricultural industries in
NJ, NC and MI during their blueberry harvest seasons.
Investigations conducted during the 2009 harvest season
uncovered egregious labor violations among blueberry growers
and farm labor contractors (FLCs) in the three states--
including the illegal employment of children in several fields.
Other violations included unsafe housing conditions,
transporting workers in uninsured vehicles, failing to pay the
minimum wage, failing to properly disclose terms and conditions
of employment, failing to comply with farm labor contractor
registration requirements, and failing to keep all required
records. In addition to recovering several thousand dollars in
back wages and assessing penalties, WHD took a comprehensive
approach to ending the dangerous practices it had uncovered.
In early 2010, before the blueberry harvest was to begin,
WHD offices in the three states took proactive steps to ensure
compliance with agricultural labor standards, particularly in
regard to child labor. WHD offices conducted outreach and
education (in English, Spanish and Haitian-Creole) to inform
employers of their legal responsibilities and ensure workers
understood their rights. WHD also met with farmers, FLCs,
community organizations, state and local agencies, and industry
associations--including the NJ Farm Bureau and the NC Blueberry
Council--to speak with them about our enforcement efforts and
to provide them with meaningful compliance assistance.
As a result of WHD's enforcement and compliance assistance
efforts, employers took observable and important steps to
ensure that children were not working in the fields. No child
labor violations were found at the farms investigated in NC and
NJ, and only one farm in MI was found in violation of Federal
child labor requirements. This is truly a win-win for everybody
and a great example of how WHD's efforts are aimed at helping
farms and farm workers prosper together. This story also
reflects the commitment my staff has to providing employers
with the tools they needed to ensure their business practices
are in compliance with the law.
Compliance Assistance
WHD has long maintained that enforcement alone will never be
sufficient to achieve the agency's mission of protecting our nation's
workers. Education and outreach to the employer community to promote
voluntary compliance has been and will continue to be one of our key
strategies for promoting sustained and industry-wide compliance with
Federal wage and hour laws.
We are equally committed to reaching out to agricultural workers
and their representatives to inform them of their rights and to
encourage them to contact us if they believe their rights have been
violated.
The common theme here is awareness. We believe that workers who are
aware of their rights and employers who are aware of their legal
responsibilities (and the consequences of breaking the law) are better
positioned than we are, in many instances, to identify and remedy labor
violations, or to prevent them from occurring in the first place.
In furtherance of our goal to increase awareness, the agency has
hired Community Outreach and Resource Planning Specialists (CORPS) to
work in WHD District Offices across the country. These officers
establish and maintain lines of communication at the local level;
engage partners in dialogue about local industry practices and labor
concerns; provide training and resources to stakeholders on wage and
hour laws; and provide WHD with recommendations on how to better serve
the needs of workers and regulated communities.
With the addition of these dedicated CORPS, WHD has increased its
outreach and education efforts to inform employers, employees and other
stakeholders about Federal wage and hour laws and to engage their
participation in promoting industry-wide compliance.
This has been particularly important in the agricultural context
where, since FY 2009, WHD has conducted nearly 600 outreach events and
presentations nationwide that were specifically geared to providing
valuable information and compliance assistance to the agricultural
industry.
WHD also regularly engages community organizations, industry
associations, employer representatives and other stakeholders in
dialogue about compliance-related matters. These stakeholder
relationships are multidimensional--it is not just us talking to them
about the importance of compliance or asking for their participation in
outreach activities, we are also asking our partners about how we can
improve our services and better serve workers and the regulated
community.
For example, WHD collaborates with Farm Bureaus, Growers'
Associations, and other industry representatives to solicit feedback
and input when developing educational and outreach materials. These
stakeholders' opinions help to inform the content of the final products
and help WHD remain focused on the topics most relevant to the intended
audiences.
This is the case with our newly developed compliance assistance
materials, which we created in direct response to feedback received
from agricultural employer groups and other industry stakeholders.
We just released a new booklet that provides employers with
simplified and consolidated information on the applicable
statues and requirements governing agricultural employment. The
information is presented in easy-to-understand language and is
broken down into components that employers may quickly
reference as needed. Separate segments cover topics including
wages, housing, transportation, and field sanitation.
This booklet is accompanied by a 10 minute video tutorial
that walks agricultural employers through compliance
requirements under the applicable laws, and provides real world
examples of compliant and non-compliant employment conditions
and practices.
We have also released a revised informational pocket card
for agricultural workers. The card will more clearly inform
workers of their rights and provide them information on how to
file a complaint with WHD if they believe their rights have
been violated.
We are very proud of these new compliance assistance materials
because they represent the benefits and success of stakeholder
cooperation and dialogue. These new resources will be valuable
additions to WHD's robust library of compliance assistance materials,
and will be distributed widely through our ongoing outreach efforts and
events.
Conclusion
Congress enacted the Fair Labor Standards Act of 1938 at a very
dark time in our nation's history--a time where those fortunate enough
to find employment were often exploited and had little available
recourse for their grievances. And Congress, in its wisdom and
knowledge of the inherent competitive nature of the market, recognized
that without strong enforcement mechanisms--such as the hot goods
provision--workers as well as responsible employers would fall victim
to the ills of unfair competition and exploitive labor practices.
I am proud to be leading an agency with such a critical mission in
the 21st century economy. We will continue our focus on data-driven,
evidence-based strategic enforcement efforts and will be engaging in
even more education and outreach. The ultimate goal of all our
strategic enforcement and compliance assistance efforts is to change
employer behavior for the better--to discourage employers from cutting
labor costs at the expense of workers' wages and working conditions,
and to help move them towards positive, compliant business practices so
that workers and employers can prosper together. Our hot goods
enforcement actions are a small but important part of this overall
mission. Our measure of success will be improving compliance levels in
the agricultural industry, so that when we enter workplaces in the
days, weeks, months and years ahead, we find fewer and fewer
violations.
Thank you again for the opportunity to testify today. I am happy to
answer your questions.
The Chairman. Thank you, Dr. Weil.
Mr. Avakian.
STATEMENT OF HON. BRAD AVAKIAN, COMMISSIONER,
OREGON BUREAU OF LABOR AND INDUSTRIES, PORTLAND, OR
Mr. Avakian. Mr. Chairman, Committee Members, thank you for
inviting me today to discuss Oregon's perspective on the use of
the hot goods provision in the investigations of perishable
agricultural products.
My name is Brad Avakian and I serve as Oregon's
Commissioner of Labor and Industries, which in our state is a
state-wide, nonpartisan, elected position. Our agency supports
our local industries with technical assistance. We train much
of Oregon's workforce, and we enforce the state's civil rights
laws in housing, public accommodations, and employment. We also
enforce the state's Wage and Hour laws making sure that workers
get paid the wages that they have rightfully earned. As a part
of that, we license all of the state's farm labor contractors,
and we manage the state's farm labor unit.
We have used strong wage enforcement, as a matter of basic
fairness, not only for the workers, but also to make sure that
the vast majority of the employers that do play by the rules
enjoy a level playing field on which to compete. We conduct
about 2,000 wage investigations a year, and in addition to
that, we field about 20,000 calls a year from Oregon businesses
seeking help navigating their way through complicated state and
Federal laws.
Our timber, agricultural, and nursery industries play a
critical economic role in our communities. They employ over
54,000 workers. We need strong wage enforcement, but we also
must ensure due process for Oregon growers and it is for this
reason, we have deep concerns about the use of the hot goods
provision with perishable agricultural goods on our farms.
The imminent perishable nature of produce often renders
contesting a hot goods motion moot. Because if the produce
spoils, its value is converted to nothing. The farmer then has
diminished or no ability at all to pay the employees' wages if
wages are truly due. In fact, the actions of a farmer facing
the choice of having their blueberries spoil in some warehouse
during a protracted legal process on a hot goods motion, is far
from voluntary when he or she is faced with signing a hot goods
consent judgment.
This imbalance of power between the government and the
accused in this kind of a hot goods action, we think obscures
any meaningful due process, and in addition, risks violating
Constitutional search and seizure, and commerce clause
protections. In addition, requiring farmers to waive their
rights of appeal, just runs contrary to basic rules of
fairness.
Now, when applied appropriately, we do think that the hot
goods provision is an effective tool in wage enforcement, but
it should be limited to the enforcement of non-perishable items
as originally intended and as those traditionally associated
with industries like the garment industry.
The United States Department of Labor is our sister
organization and I must say that we value our partnership with
them very much. We work to stay in close communication so that
we can both effectively coordinate our investigative resources.
We believe in strong wage enforcement. We also believe that
meaningful action against employers that fail to pay their
wages can be taken without violating the fundamental principles
of due process.
Mr. Chairman, I want to thank you again for your
consideration of the issue, and for the Committee's interest in
Oregon's perspective.
[The prepared statement of Mr. Avakian follows:]
Prepared Statement of Hon. Brad Avakian, Commissioner, Oregon Bureau of
Labor and Industries, Portland, OR
Mr. Chairman, Representatives:
Thank you for inviting me to discuss Oregon's perspective on the
use of the ``hot goods'' provision of the Fair Labor Standards Act
during the investigation of perishable agricultural products.
My name is Brad Avakian and I serve as Oregon's Commissioner of
Labor and Industries, a non-partisan statewide elected position. Our
agency supports local businesses with technical assistance, helps train
much of Oregon's workforce, and enforces our state's civil rights laws
so that people are treated fairly on the job, in housing and in public
accommodations.
We also enforce the state's Wage and Hour laws, ensuring that
workers receive the wages to which they're entitled. We license all the
state's farm labor contractors and manage the state's farm labor unit.
Last year, our enforcement efforts returned more than $2 million to
Oregon workers who had not received the wages they had earned.
We view strong wage enforcement as a matter of basic fairness not
only to the individual employees, but also the vast majority of
employers who deserve a level playing field on which to compete. Our
agency conducts more than 2,000 Wage and Hour investigations each year.
In addition, we responded to about 20,000 calls last year from
employers helping them to avoid potential wage violations in the first
place.
In Oregon, our timber, agricultural and nursery industries play an
important economic role in communities around the state. In fact,
together, these sectors employ over 54,000 workers--which is one of the
reasons for our interest in enforcement that's both strong and fair.
Our agency is committed to having strong wage enforcement while
still ensuring due process for Oregon growers. For this reason, we
continue to have deep concerns about using the ``hot goods'' provision
of the Fair Labor Standards Act with perishable agricultural goods on
Oregon farms.
The imminent perishable nature of the produce often renders
contesting a ``hot goods'' motion moot, for when the produce spoils, it
has no value. With the loss of the goods, the farmer has diminished or
no ability to pay employees if wages are truly due. In short, the
actions of a farmer facing the choice of having blueberries spoil in a
warehouse during a protracted legal process are far from voluntary when
he or she signs a hot goods consent judgment.
The imbalance of power in this type of hot goods action obscures
any meaningful due process during the enforcement action and risks
violating Constitutional search and seizure and commerce clause
protections. Requiring farmers to waive their rights of appeal--even if
future findings of fact or law would exonerate the farmers--runs
contrary to basic rules of fairness.
When applied appropriately, use of the ``hot goods'' provision can
be a powerful and effective tool in wage enforcement. But ``hot goods''
should be limited to the enforcement of non-perishable items such as
those traditionally associated with the garment industry.
We value our partnership with the U.S. Department of Labor and work
to stay in close communication with them so that we can most
effectively coordinate investigative resources. The Oregon Bureau of
Labor and Industries believes in strong wage enforcement for our
state's most vulnerable workers. We work to strengthen our workforce
and believe that we can take meaningful action against employers
failing to pay wages without violating fundamental principles of due
process.
Thank you again for your consideration of this issue and the
critical work of ensuring fair enforcement of important wage and hour
protections.
The Chairman. Thank you, Mr. Avakian.
I have a couple of questions and I would like to remind
Members that they will be recognized for questions in order of
seniority for Members who were here at the start of the
hearing. After that, Members will be recognized in order of
arrival. I certainly appreciate Members' understanding of that.
I now recognize myself for 5 minutes.
Dr. Weil, what is the budget for the Wage and Hour
Division, the budget request for 2014?
Dr. Weil. Thank you. I want to give you the precise number,
$220 million, Mr. Chairman.
The Chairman. Okay, I show your request as $243 million,
but that is fair enough. So you said that you have a $240
million budget. Do you pay your legal fees out of that budget,
or are they paid out of the Department of Justice?
Dr. Weil. I am pausing only because we have a solicitor's
office that undertakes legal actions for the Wage and Hour
Division as it does for other agencies which has its own
budget, and they provide us legal assistance in all matters as
they do for other agencies of the Department of Labor.
The Chairman. In other words, you have $\1/4\ billion and
there is another agency's pot that could also be dipped into
when bringing these charges against a U.S. farmer?
Dr. Weil. Well, we have resources to undertake our mission
and our statutory obligations in regards to enforcement,
voluntary compliance, and our other activities.
The Chairman. Where the farmer has to use their private
money and their private assets to defend themselves. Let me
read you a definition, if I could. ``Extortion is the criminal
offense of obtaining money, property, or services from a
person, entity, or institution through coercion. Coercion is
the practice of compelling a person or manipulating them to
behave in an involuntary way whether through action or inaction
by use of threats, intimidation, trickery, or some other form
of pressure, force, or duress.''
Dr. Weil, we have acknowledged that you have $\1/4\ billion
budget that is government funds. Certainly, the farmer has to
pay for it out of their private funds. The U.S. District Court
specifically said that your Department forced a farmer to sign,
under duress, that they would not seek legal remedy in the
court that is guaranteed by the United States Constitution.
Do you believe that when the farmer uses their private
funds, their personal dollars, their family dollars that they
have worked for generations to build and to grow that farm
with, do you believe that when you have in excess of $\1/4\
billion to use against them that when that farmer defends
themselves and the court rules in favor of the farmer, do you
believe that the agency should return the farmer's legal fees
to them?
Dr. Weil. Thank you for your question, Congressman.
I would begin by saying the budget that you referenced is
to allow us to enforce a set of statutes that cover 135 million
American workers in 7.3 million workplaces, directed towards
every sector of the economy and it is in that context we deploy
those resources very carefully through the range of enforcement
and outreach tools that we have available to us.
The Chairman. Sir, let me rephrase the question then. When
you, when your agency, when the people in your agency who I
would respectfully submit that if they did not work for the
Federal Government, they would be held in criminal court, for
engaging in the coercion and the duress that the United States
District Court said was used against this farmer. What recourse
should the farmer have against your agency when the court rules
in favor of the farmer?
Dr. Weil. Well, I would begin--first of all, I can't
directly comment on the particular case because, as you know,
it is being litigated. I will say we undertake all of our
enforcement activity, including in agriculture, and with
respect to the hot goods as well as any enforcement activity,
with very carefully crafted procedures and with a very well-
trained investigative workforce.
The Chairman. Dr. Weil, with due respect, if you were
operating in a fair and equitable manner we would not be here
today. And this, when the government, when people in charge of
agencies use the laws in a manner that the United States Courts
say have infringed upon the American citizen's Constitutional
rights, then with due respect, there should be consequences for
the people that lead that agency, and for the people who
engaged in that duress against the American citizen.
And I would respectfully submit that if there were we would
not be here today and the conduct of your agency would be much
better.
With that I yield to my colleague, Mr. Schrader.
Mr. Schrader. Thank you, Mr. Chairman. Dr. Weil, Dr. Wile
or Wheel?
Dr. Weil. Weil.
Mr. Schrader. Excuse me, sir. Dr. Weil.
Dr. Weil. Thank you, Congressman.
Mr. Schrader. How often has the hot goods provision been
used prior to this last decade on perishable agricultural
products?
Dr. Weil. In the period 2001 to 2013 we have used it 28
times.
Mr. Schrader. How about prior to that? I was asking prior
to the last decade.
Dr. Weil. I don't have in front of me figures regarding
prior use of that. I know the first time hot goods was invoked
in the agricultural industry, and this was towards a processor,
was in 1946.
Mr. Schrader. Was it a processor, that is obviously a
perishable situation? We are talking about either frozen, or
packed, or canned type of products?
We are concerned at this hearing about the use of hot goods
with regard to perishable products. I think we would all agree
that as Commissioner Avakian indicated, it is a fine tool to
use on non-perishable products because the value of the product
doesn't deteriorate. But we are talking perishable. So the
answer to your question is zero prior to your use in this last
decade.
Why were these three growers targeted in Oregon in 2012?
Why were they picked on? Why did you pick out these three?
Dr. Weil. Sure, and again, I can't speak to the particulars
of this case in litigation, but I would be pleased to speak
about how we target our investigation resources generally.
We undertake what are called directed investigations
throughout the country based on a very careful assessment of
facts about the prevalence of violations of the Fair Labor
Standards Act, across different industries in different parts
of the country. All of our regions in our district offices
engage in a review of industries in their area in terms of
respective violations.
Mr. Schrader. Why then, all of a sudden, this new-found
interest in using hot goods in perishable products? Why was
that determined to be something that hadn't been done before,
and the last few years seems to have been popular with the
Department?
Dr. Weil. Well, I would first point out and I would be
happy to look back prior to the period where you ask your
question, but from 2001 to 2008 during President Bush's
Administration, we used the authority 17 times. And then we
used it 11 again up until--in terms of closed cases since 2009.
Mr. Schrader. These were all perishable products?
Dr. Weil. These are in agriculture.
Mr. Schrader. In perishable products?
Dr. Weil. Well, yes, I mean, I would certainly acknowledge
agriculture as perishable products.
Mr. Schrader. Well, I guess I would like after the hearing
for you to get me that information. There is a big difference--
--
Dr. Weil. I would be happy to.
[The information referred to is located on p. 43.]
Mr. Schrader. As I have tried to make crystal clear my
question relates not to processed products but to fresh
products. Have either of these farmers, any of these farmers in
Oregon, have a past history of violation of Labor laws?
Dr. Weil. While we used, as I said in terms of setting up
our directed investigation protocols, part of what we look at
is past behavior of individual employers. Our overall concern
is driven by the prevalence of violations in a sector.
Mr. Schrader. Did these farmers have past violations, on
child labor laws?
Dr. Weil. Again, I don't want to talk about the particular
ones in litigation. In general, in agriculture----
Mr. Schrader. The answer, I can give you the answer,
actually. The answer is no. And it was clear to the Department
when they came on the farm that these were good actors with no
previous violations. Is it standard practice now for the
Department of Labor to quarantine perishable products when you
are doing an investigation without due process for these guys?
Dr. Weil. So our procedure is to assure compliance with the
law. We have used it in closed cases 11 times over a period of
time, or 28 times over a period of time. We have done 7,500
agriculture investigations.
Mr. Schrader. So is this your first choice then? This is
something you go to right away?
Dr. Weil. Absolutely not, Congressman, and let me clarify
that.
Mr. Schrader. Well, then why did you use it right away on
these farmers that had no prior history of any violation? I am
confused.
Dr. Weil. Congressman, we use a procedure where when we
find violations we undertake discussions with the grower or
farm labor contractor involved.
Mr. Schrader. So you concluded these people were guilty
because of the investigation? It is my understanding in the
American judicial system, in the administrative system, people
are not judged guilty through an alleged violation.
Investigations take time. Yet, you imposed the hot goods order
against Oregon farmers prior to even concluding your
investigation. Do you think that is fair?
Dr. Weil. Congressman, I would characterize our
investigations procedure different than you did. In any
investigation----
Mr. Schrader. I am just describing what actually happened.
I know what you would like to do, but I am describing what
actually happened. It is incontrovertible. A United States
District Court said so.
Dr. Weil. Sure. No, and Congressman, I am very proud of the
investigators, the 1,100 people who work for my agency because
they are trained in any investigation to undertake their
evaluations of violations prior to meeting with the employer.
And then when they meet with the employer they have a
systematic discussion of what they found in the course of their
investigations that are based on discussions with workers, the
employer----
Mr. Schrader. I am sorry to interrupt you again, but that
is not what happened in Oregon. You know, this hot goods threat
was levied as the court described very clearly, without the
opportunity for the farmer to protect his livelihood, his
investment, his crop. It was coercive, completely coercive. I
would use the word extortion.
The Department of Labor, in my opinion, extorted money from
these Oregon farmers. Completely inappropriate. I don't see how
you can stand and defend that. I think the men and women that
work in the Department of Labor are great folks, trying to do
the right thing, but were obviously told, given a directive, to
impose this arcane and inappropriate use of hot goods in
perishable commodities. You are violating people's due rights.
That is not good advertisement for what the United States
Government is all about. We the People are being attacked by
our own government without due process.
Does it bother you that a Federal judge has clearly
indicated this is a coercive tactic used on perishable
agriculture products? Does that bother you, Doctor?
Dr. Weil. Congressman, courts have upheld the use of the
hot goods provision since the passage of the Fair Labor
Standards Act beginning with the Supreme Court in 1941.
Mr. Schrader. We are talking about perishable products
again. You keep diverting over to other goods. We will all
acknowledge, there are other goods, that is fine. But we are
talking about perishable products.
What courts have upheld the use of hot goods in non-
perishable products? We have this recent decision that clearly
states it has not been used before, and this is the first case
that unfortunately has to come before the court of the United
States, again, using taxpayer dollars, trying to defend the
basic rights of people when it should be crystal clear to the
Department that this is an inappropriate use.
Dr. Weil. Congressman, the statute does not exclude any
sector based on perishability. As you know, the statute has
only two very specific exclusions in terms of common carriers,
and those who receive goods who are not knowledgeable about the
good faith----
Mr. Schrader. So what about the courts? This is a United
States District Court. It said that the usual practice had been
to lift the hot goods provision, the quarantine, if you will,
once the back fines and alleged wages were paid into escrow.
Why was that not acceptable to the Department of Labor in this
case?
Dr. Weil. And again, as you know, I can't comment directly
on the case because it is in litigation. We have very clear
procedures. I want to go back to the fact that----
Mr. Schrader. Well, this was your policy.
Dr. Weil. Yes, sir.
Mr. Schrader. The court did its research, too, not just
myself, and the Committee. They did their research. They said
the historical precedent had been once those fines and the
alleged wages were held in escrow, while an investigation could
continue, while the farmer could contest that, get the facts to
be able to understand what was going on, the hot goods
objection was lifted.
Why did that not occur in the Oregon case?
Dr. Weil. We have a practice. We do use escrow in certain
cases. It is judged on a case-by-case basis by the
investigator, in consultation with the district office and the
regional office of our agency.
Mr. Schrader. So why did you persecute these particular
farmers then? I guess I am curious. Why not do the escrow? That
seems very fair, respects due process, and still gets you the
money and potentially these ghost workers the money they are
due.
Dr. Weil. The use of escrow is undertaken in cases where it
is the judgment of the investigator, again, in consultation
with other offices, our regional offices, as well as our
solicitor's office, that there is progress in negotiations in
good faith on the part of the employer where back wages can be
put in escrow and goods can be allowed----
Mr. Schrader. Well, they did that. They did that. So why
wasn't the quarantine that was imposed not lifted?
Dr. Weil. Well, in the--I can't comment on the particulars
of this case. I can comment that our procedures are very clear
in what instances we uses escrow, and it is where we are having
progress towards resolution which we fully acknowledge.
Mr. Schrader. You had policies here. I mean, you are
violating your own policies. You are violating your own
policies--your Department violated what you just said. It is
sad. This is indefensible. You keep digging a bigger hole for
the Department of Labor with your testimony, sir.
Dr. Weil. Well, I don't think so. What I am trying to
clarify is that we have very clear procedures and practices
that we do institute, and certainly under my watch, I am very
aware about the issue of perishability that you are raising.
And that is why in order to both protect workers and
protect the employers who are complying with the law, the vast
majority of employers are farmers who are living within the
statute, are also being protected by our procedures which,
again, in only 28 of 7,500 investigations have we actually
used. We have used. We have used----
Mr. Schrader. You can't even describe whether or not these
were all perishable cases. I would hope that in the future the
Department of Labor would be a lot more respectful of our
Constitutional guarantee of due process if they are going to
use this hot goods provision. I strongly advocate it not be
used in a perishable cases, or if it is, that once the farmers
pay their fine, their alleged fine and their alleged back
wages, that the Department would at least let these products go
forward so American commerce could resume. We are in tough
times now, Dr. Weil.
And I will yield back.
The Chairman. Thank you, Mr. Schrader.
We are going to try to hold to the 5 minute limit. Then we
will, as I said, we will have multiple rounds of questioning.
And I would now like to recognize Mrs. Hartzler.
Mrs. Hartzler. Thank you, Mr. Chairman.
Dr. Weil, this is a question for you. If a farmer offers
all of his or her workers a compensation package based on
performance, and those workers were to take advantage of that
opportunity by working harder to receive the higher
compensation, is that a violation of the Fair Labor Standards
Act? Yes or no is fine.
Dr. Weil. No, that would not be a violation as long as they
earned at least the minimum wage for the individual worker.
Mrs. Hartzler. In a recent enforcement action the
Department of Labor determined that anything over 60 pounds of
blueberries picked per hour to be abnormal when expert sources
and research has proven that normal is anywhere between 100 and
200 pounds. Is it normal practice for the Department of Labor
to ignore the research of experts in agriculture production in
harvesting when taking enforcement actions against farmers?
Dr. Weil. Congresswoman, we undertake, in order to make an
assessment of whether the piece rate that is being provided and
the actual work done complies with minimum wage standards
through a combination of interviews with workers in the fields,
at the actual employer involved, a review of payroll records,
and a discussion with the employer and any farm labor
contractors in order to ascertain whether individual workers
have been paid according to the minimum wage.
We are increasingly using time studies based on the
activities of workers in the field at the time of the
investigation because, as you know, there is an enormous
variability in the rate of any farm activity that can be done
based on particular conditions, harvest, even sometimes
subsequent rounds of harvesting, the same crop can yield
different kinds of rates of output.
And so that is why we have to look very closely and rely in
particular on employers keeping good records so that we can
ascertain whether a piece rate meets the minimum standards, or
goes beyond that.
Mrs. Hartzler. So as you recall, many of these workers are
paid based on productivity, or at an hourly rate, so are these
works compensated by the Department of Labor for the time they
are unable to work due to these interviews you just talked
about?
Dr. Weil. We try to, to the best of our ability, and again,
that begins with our hope that employers are keeping good
records which assist both them and the workers in making a
judgment about whether in the period of time we are
investigating, whether workers have been compensated for their
time at least meeting the minimum standards of the Fair Labor
Standards Act.
Mrs. Hartzler. Now, a lot of these workers have a contract
labor agreement with the employer ahead of time based on
compensation, based on productivity, and not necessarily
hourly. So does the Department of Labor have authority to
change the terms of these compensation agreements?
Dr. Weil. No, we do not. And in fact, our whole statute and
our procedures in the agricultural area are built around the
fact that we know that piece rates are a common practice used
throughout agriculture in lots of different industries and what
we are trying to ascertain, again, is whether workers have been
compensated to the minimum standards provided in the law, which
is the minimum wage in the Fair Labor Standards Act.
That requires us to have very careful specific procedures
to ascertain whether that has been attained, and you are quite
right, in agriculture, that often is the piece rate. So that is
the basis we make our comparison in trying to very carefully
see if each worker has been paid according to the piece rate
compensation system in such a way that it meets the minimum
standards required by the law.
Mrs. Hartzler. Now, in a recent enforcement action the
Department of Labor insisted that a farmer waive all rights for
future action on the issue including appeal. Now, is this the
policy of the Department to intimidate farmers into waiving
their Constitutional due process rights?
Dr. Weil. I think you are describing a consent judgment,
which is a very common occurrence where a court reaches
agreement with all of the parties, where parties agree to that,
and one of the provisions of a consent judgment is that the
final agreement will be respected by the parties.
So if you are speaking about a consent judgment, which is
entered in voluntarily by the parties in conjunction with a
court, those typically say that those--the agreement or the
terms of the agreement----
Mrs. Hartzler. Well, I have 7 seconds left. What was there
on the ground, or in this case, or has the Department ever
asked a farmer, or said, here is your fine, but if you promise
not to appeal, it will be X amount. It will be less?
Dr. Weil. That would not be, the procedure would not be
undertaken in that way. Certainly, in regards to what I would
want our investigators to do, and the way they do carry out,
that we would get to that stage through a different process
than your question implies.
Mrs. Hartzler. Okay. I yield back.
The Chairman. Thank you, Mrs. Hartzler.
I can tell you that is exactly what has been done by other
agencies. I know where they levied a multi-hundred thousand
dollar fine and said, but if you will write us a check for
$25,000, for example, we will waive all of the other fees. That
has been done, I know by the EPA in my district with regard to
paperwork violations.
Ms. DelBene.
Ms. DelBene. Thank you, Mr. Chairman.
I would like to thank Chairman Scott and Ranking Member
Schrader for holding this hearing, and thank you Dr. Weil and
Commissioner Avakian for being here today.
No one here would condone violations of the Fair Labor
Standards Act, but the actions taken by DOL in regards to these
cases appear to be egregious. My district in Washington State
is one of the largest berry growers per capita in the country.
This is especially true for raspberries, and increasingly so
for blueberries. I am very concerned that we will see these
actions repeated in my district against farmers who play by the
rules.
It seems like your investigative method leaves our
constituents with a false choice, admit guilt where there may
not be any, and pay a hefty fine to save your crop, or fight
the case and lose the crop.
For example a blueberry farmer in Washington State was
cited for employing underage children which that farmer denied.
However, that farmer, the employer, could not verify or dispute
the violation claimed by DOL because DOL refused to release
their notes. Hot goods was invoked on 26,000 pounds of
blueberries and a 30 day hot goods hold was placed on the rest
of the crop worth about $35,000. The employer was forced to
admit guilt.
So, Dr. Weil, the scenario, and we have heard many of these
scenarios before, you have someone in a situation where they
have no place to go for due process. They have to potentially
give up their crop. Does that seem fair? Is that an appropriate
action to be taken?
Dr. Weil. Thank you, Congresswoman. I feel like I should
clarify the process because I want to be clear.
Ms. DelBene. I just want to say this: the fundamental part
here is that you have created a situation where a grower may
have only a few days to go to court, win a judgement, and make
their crop available in the market for them to meet the asking
price without suffering a loss, or a decline in value.
Do you ever think it is okay to do that? Do you understand
the situation you are putting a farmer in who may very well
have a strong defense, and if they defend themselves they may
not get their crop back in a saleable condition?
Dr. Weil. And thank you.
What I wanted to clarify is our investigators cannot block
shipment of the goods. They are not allowed to do that. When
they find violations in the course of an investigation, when
they meet with the employer, they ask the employer to
voluntarily restrain shipment of those goods until the
situation can be resolved.
If a resolution can be made, which it is in the vast
majority of cases, the shipment of goods are released and
everything proceeds with both compliance, assuring both the
workers that they have received what they are entitled, and
that other farmers who are complying with the law are not put
at a disadvantage----
Ms. DelBene. But an agreement means an admission of guilt
for someone who may feel like they have a case and are not
guilty of the violation they have been accused of?
Dr. Weil. If the parties feel that they are not--that the
violations are inappropriate, they are within their rights, and
if we feel we need to not allow the goods to flow, we need to
go to a Federal Court.
And in a Federal Court both the employer, the grower, the
farm labor contractor, and the----
Ms. DelBene. But you understand that every day for a
perishable product like a berry, is prevented from going to
market its marketability declines, in the end even while a
court may find that they are not guilty of the infraction?
Dr. Weil. Right.
Ms. DelBene. Are you going to pay them back for the product
that they weren't able to take to market?
Dr. Weil. We are very aware, and again, this is why we use
it only in very specific instances, of the perishability of the
product, and that is why we move quickly to resolve the problem
as quickly as possible for the benefit of the workers and of
the growers involved.
Ms. DelBene. But it is not. In a perishable case, without
defining what quickly means, that product is gone. That farmer
who, if found not guilty, now has lost their product unfairly,
and that can't be returned to them. Isn't there another method
that can be used without taking their crop?
Dr. Weil. Again, we can ask the parties to voluntarily
refrain from shipment, but we do not seize the goods. We are
not allowed. We are not authorized by the statute to seize the
goods. We can go to a court in the case that we can't resolve,
which are, what are, when we have used this authority in
significant cases. I would point out that the average hot goods
case has back wages due that are six times the level of overall
agricultural cases; that the number of employees affected are
eight times----
Ms. DelBene. But Dr. Weil, I just want to point out that we
are not talking about all hot goods cases. We are talking about
a very specific cases of perishable, only perishable goods
because once again, the value will be gone by the time it comes
to resolution.
I have run out of time so I yield back. I think it is
important for you to distinguish between perishable commodities
and those that are not, because we feel like there is a big
difference between these two perishable categories.
Thank you, Mr. Chairman, and I yield back.
Dr. Weil. I understand that. Could I just clarify,
Congresswoman, that the statistics I gave you were specific for
agriculture.
Ms. DelBene. It is not just agriculture. Perishable goods,
not all of agriculture has the same deadline that, for example,
for certain fruits and vegetables have.
Thank you, Mr. Chairman.
The Chairman. Before I recognize Mr. Yoho, Dr. Weil, she
asked you a very specific question in whether or not the agency
would reimburse the farmer for the loss of their value and the
answer to that is no. You did not answer the question, but the
agency has never reimbursed the farmer for the loss, have they?
Dr. Weil. The agency has enforced the Act which is our
primary responsibility.
The Chairman. Have you ever reimbursed the farmer for their
loss from your action?
Dr. Weil. I would have to--I am not aware of a situation
like that.
The Chairman. Thank you. Mr. Yoho.
Mr. Yoho. I want to continue on that, Mr. Chairman, and I
appreciate it because this is something that needs
clarification. That was one of my questions. If a hot goods
provision is used against a farmer and a perishable crop is
prevented from being sold, and you said it is voluntarily, but
as we have heard and I have experienced in our area with
blueberries, watermelons, row crops.
If that is voluntarily giving up and the investigation goes
on, and that farmer is found not guilty that he did not break
any laws, who is responsible for the price of that crop? If
charges are brought against him and he voluntarily gives it to
you, turns it over, but then with the investigation, they say,
well there is no violation here, and that crop is gone, the
value is zero, who pays for that crop?
Dr. Weil. We would not, Congressman, enter into--the whole
use of the hot goods would occur after an investigation is
completed. And where there is----
Mr. Yoho. Well, in the case of the Oregon farmer with the
blueberries, wasn't it Dr. Schrader, the blueberries, that
crop, was that not held up and not sold?
Dr. Weil. There was an investigation.
Mr. Yoho. Did the crop get held up?
Dr. Weil. Well, again, I don't want to talk about the
particulars of that case because it is in litigation. In any of
our agricultural cases where we have invoked the hot goods, the
sequence would be: We find significant and systemic violations.
We enter into discussions with the employer and the farm
labor--or the farm labor contractor about our findings. In the
course of those findings, or in the course of those
discussions, we would indicate that we think there are goods
that are hot, that might also be because of not just back
wages, but because of child labor violations.
Mr. Yoho. Well, I have had situations where they have come
on the watermelon farms you have a short time you brokered
those melons and if something comes up like this and you are
out there and you say, ``Hey, we have labor violations there,''
that farmer, according to you, has the right to voluntarily
relinquish his crop or sell it.
If he voluntarily relinquishes it, on the threat of he is
in violation, and then it is proven he is not and that crop
doesn't go anywhere, there is a lost crop. Somebody has lost
some money on that and there should be restitution back to the
farmer if he is found innocent.
I want to move on to something else. You stated between
Fiscal Year 2009 and 2013 Wage and Hour concluded nearly 7,500
ag investigations. Do you have figures for the years of 2005 to
2009, the amount of active investigations that were concluded?
And if not, can you get me those.
Dr. Weil. I could. I would be happy to get you those.
[The information referred to is located on p. 44.]
Mr. Yoho. I would love to see those. Again, I come from a
large agriculture area.
Dr. Weil. Yes, sir.
Mr. Yoho. And there is that big differentiation between
perishable and non-perishable like a peanut. You know, you can
plant or harvest a peanut, and you don't have to rush it right
away like you would a blueberry to a storing locker.
What we have seen in our area is there has been an
escalation in the Department of Labor investigations in these
fields where there is migrant labor. And I understand why you
are doing that.
But there has almost been like a rabid response--I have
been around agriculture since I was 16 years of age, and we
have seen just a ramp-up in the amount of investigations with
this Administration.
And I base that on talking to a person at HHS and the
Department of Labor. And I asked them if they have increased
the amount of investigations. And they said, ``Oh, yes. Under
this Administration, we were ordered to increase those.''
And I want to know why that is.
Dr. Weil. Well, let me speak about what we have done in
terms of Wage and Hour in targeting our investigations.
And it is very true since the beginning of the
Administration we have focused on sectors of the economy where
we find evidence--and, again, we are very data-driven--of
higher levels of violations and have focused our attention,
given the fact that we have only 1,100 investigators and 7.3
million workplaces to investigate, on industries, including
some agricultural industries, where we find high levels of
violation.
So the trend you are describing is part of a larger
emphasis on focusing our very limited resources on the
industries and employers where we believe the violations are
highest. And that is very consistent with the basics of our
statute in terms of both protecting workers and responsible
employers who are playing by the rules.
Mr. Yoho. And I get the same feedback from the producers in
our area, that the Department of Labor treats our producers
like they are guilty and needed to be proven innocent. And I am
hearing that in Florida. I am hearing that in Washington and
Oregon and where Mrs. Hartzler is from.
And I will save my questions for the next round.
The Chairman. Dr. Weil, before I recognize Ms. Kuster, I
think profiling is illegal.
Ms. Kuster.
Ms. Kuster. Thank you, Chairman Scott and Ranking Member
Schrader, for holding this hearing.
And thank you to our witnesses today.
I believe that enforcing our labor standards and ensuring
the equitable treatment of farmworkers is incredibly important,
but I am concerned about the heavy-handed actions taken by the
Department of Labor when it comes to the cases that we have
heard about today in Oregon.
I have spent a lot of time over the past year talking to
farmers in New Hampshire, and I have heard quite a bit about
the difficulties they face trying to comply with shifting
requirements and disagreeable staff at the Department of Labor.
I believe in enforcing our Wage and Hour laws, but I also
think that the Department of Labor needs to start making a
greater effort to work with the states and with the farmers in
this process.
My questions this morning are for the Commissioner.
Can you talk to me about your concerns with the approach
that the Department of Labor took in these cases and whether
there are other tools that could be used to ensure that farmers
are adhering to our labor standards.
Mr. Avakian. Mr. Chairman, Congresswoman, there are many
different investigative tools and prosecutory tools that can be
used, other than hot goods, in the thousands of investigations
we do and in what I am sure is the tens of thousands of
investigations that the United States Department of Labor does.
Statistically speaking, virtually none of those use the hot
goods.
And so you do a full investigation, oftentimes based on
probable cause that a violation is occurring somewhere. After
you have a substantial amount of evidence that a violation has
occurred, you issue charges. And then you enter a prosecutorial
process in which the respondent, like a defendant, has a chance
to then defend themselves.
That would be the typical process used. And that works very
well with respect to prosecuting bad actors and protecting
workers.
In this particular case, we have, I suppose, two primary
concerns. One is that, first, we disagree that--we think that
there is an inherent problem with the use of the hot goods
provision with respect to perishable items, even if you do go
through the right process of getting a hot goods order.
But in the cases in Oregon, it involved not the obtainment
of a hot good order, but the threat of one, and that the
farmers could avoid the legal process of the hot goods motion
if they simply paid up and paid up quickly. That disparity in
power is what causes the Constitutional due process and, we
think, search and seizure and commerce clause problems.
The second concern we have is, post the Federal District
Court's order vacating the consent judgments in Oregon, we do
not know what the status of the damages are, where the money
is, and are unclear why, given the order vacating the
judgments, the money has not been returned to the farmers.
Ms. Kuster. Well, it seems to me, as an attorney and a
litigator, and as a practical matter, doesn't it make more
sense to you that, if the goods were sold, then the farmer
would be in a position to pay whatever fines were due if that
person was found to be in violation?
The whole point of our judicial process, innocent until
proven guilty, is that you have the opportunity to make your
case. And I am quite confident that the legal sanctions would
be sufficiently strong to discourage violations. My time is up,
but I am just wondering, doesn't that just make more common
sense?
Mr. Avakian. Mr. Chairman, Congresswoman, yes. It makes
common sense. But you also are implicitly hitting on a very
important legal concept that also is related to the deprivation
of due process rights here.
In a hot goods action, if, hypothetically, the government
were to take the goods, sell the goods, or in some way obtain
the money that it is worth, that would be one thing, because
then the money could be used to pay the workers or could be
held in trust while the investigation is completed and, if the
investigation exonerates the farmer, the money could be
returned.
The difficulty here is what--the legal term of conversion.
In this type of a situation where the blueberries, for
instance, are held in a warehouse for more than 3 or 4 days and
possibly spoiled, the value of the goods has been converted to
zero.
Ms. Kuster. Right.
Mr. Avakian. And there--not only is not then money
available in order to pay the workers, but there is no value of
the product left either for the government, for the farmer, or
for the workers. And that conversion of the goods is what
creates the imbalance of power leading to the deprivation of
Constitutional rights.
Ms. Kuster. Thank you very much. And thank you for making
the trip out here. That was precisely my point, but you said it
much more clearly.
And thank you, Mr. Chairman. I yield back.
The Chairman. Thank you. Mr. LaMalfa.
Mr. LaMalfa. Well, we have burned over an hour already in
this Committee.
Dr. Weil, since we can't talk specifically about a case,
have you ever had like a traffic violation or some sort of
thing where you have had to--received a ticket for something to
do with your car, whether it was parking or speeding or some
other thing like that? You ever got one of those?
Dr. Weil. I feel I should have advice of counsel before
answering that question.
Mr. LaMalfa. That would fit with the hour so far.
Dr. Weil. Yes, I have. I have.
Mr. LaMalfa. And so have you ever felt like some of those
were maybe not just and you send the ticket in there with a
payment and you want to fight it in court? You ever done that?
Dr. Weil. I have, on occasion.
Mr. LaMalfa. Yes. Me, too.
But I always get this yucky feeling when I send the check
in with the thing--with the notice, the summons, whatever you
call it, that my chances of getting my check back aren't very
good because I am probably going to be found guilty anyway.
I think that is the same feeling, only multi-extrapolated,
that these growers face, is that, ``I am probably not going to
get a good shake at due process here.''
And then, when you invoke hot goods and you have a
perishable product--I am a farmer in my real life, too. I
happen to farm rice. So perishability is a lot different than
it is for fruit growers and other crops of that nature, milk,
like that.
And so you have bought berries at the store. Right?
Blueberries, strawberries, raspberries especially. Right?
Dr. Weil. Yes, sir.
Mr. LaMalfa. And so, when you get them home, if you kind of
forget about them in the back of the refrigerator for a couple
of days, you get--that white fuzz starts growing on them.
Right? And so you think, ``Boy, that was sure a short shelf
life for my berries.''
And so actions like this just take a big chunk off the back
end of the shelf life of the farmer's product that he is trying
to get to the market. And I don't see how in the world that--if
you brought an action to them, that it would be seen as fair in
any fashion.
And why in the world--answer me this question. Why would
they want to voluntarily hold on to that crop, whether it is in
the field or maybe a warehouse that they are paying by the hour
or by the day to keep it cold-stored and maybe it is a
warehouse that has a fast turnover and you have to get this
product out because the next farmer is coming in?
Why would they voluntarily keep that if they feel that they
are in the right and they have to get this product to market
before the white fuzz starts growing on it that we have all
experienced in our refrigerator?
Dr. Weil. So--and my staff knows I love analogies as well.
So if I could go back to your first analogy and then go to
your second analogy, when I make the decision whether or not to
contest a traffic ticket in my hometown, I do it on the basis
of a trust that, if I do decide to contest that ticket, I will
get due process.
Our procedures are to provide growers or employers,
generally, that same confidence in the process. That is why we
have these procedures that are very carefully undertaken----
Mr. LaMalfa. But, sir, the government is not holding on to
your car in impoundment in this case so you can't get back and
forth to work or drive to get your kids to school or whatever
is going on----
Dr. Weil. And neither do we seize the goods. We are not
allowed to seize the goods. We do not----
Mr. LaMalfa. You talk about voluntarily holding on to the
goods. Why would they do that when they have that time line?
You get the time line. Again, you get how stuff rots in the
fridge or cold storage. Why would they do that?
Dr. Weil. And that is why our investigators move with
alacrity in those situations----
Mr. LaMalfa. Alacrity?
Dr. Weil.--because we know that the goods are perishable.
And we are very cognizant of that, and that is why we have used
this particular provision in very few of the 7,500 cases
involved in it. I----
Mr. LaMalfa. But when you are that case, it is a big deal.
When you are that case. And so you either sign on the dotted
line saying, ``I basically admit guilt, and I pay a fine or put
it in escrow.''
See, what I do not understand is that--how come you can't
recognize the timeliness of this and still have your
investigation ongoing? And if they are fine--or if they are
guilty, you can fine the heck out of them later.
Dr. Weil. Right.
Mr. LaMalfa. But you go though your investigation. But why
would you have the grower held up with the perishable product
that is going to have fuzz growing in the customer's
refrigerator?
They may not buy that brand anymore from that store anymore
because they don't like that berry now because of this holdup
on a hot good that is a perishable product. That makes no sense
to me.
Do you get that, sir?
Dr. Weil. I understand what you are saying, Congressman.
And that is why very often, when we feel the discussions are
moving in a positive direction, we use escrow for precisely the
reasons you have describe.
Mr. LaMalfa. How many days between these discussions and
escrow? What if it is on a weekend? How does all this work?
Dr. Weil. It would depend on the particular instance that
we are discussing. But there is--in the vast, vast majority of
cases, those goods move, including the cases in Oregon. Those
goods moved. They were not withheld, ultimately. There was a
resolution----
Mr. LaMalfa. Under a possible threat of being taken to
court and having a procedure done in court to cost them more
and more money, unless they just give in and go with it.
Mr. Chairman, I will yield back until the next round of
questions.
The Chairman. Dr. Weil, you stated that you had only used
this 28 times. Is that correct?
Dr. Weil. That our--our records in our investigation show
the hot goods provision being used 28 times since 2001. Yes,
sir.
The Chairman. How many times have the people in your agency
threatened to use it?
Dr. Weil. My understanding of how we keep these records is
that these indicate times that the hot goods provision have
been invoked by our investigators.
The Chairman. In other words, you have no idea how many
times your investigators have threatened the farmer with them?
Dr. Weil. It would be against our protocols--again, I
wouldn't--I wouldn't call it threatening employers or farmers.
It would be getting to the point where they are being asked
to restrain shipment of the goods because of the findings of
the investigation.
The Chairman. If an 800 pound gorilla comes up to you and
says, ``Give me your wallet or I am going to take your car''
and you hand over the wallet, did you voluntarily give the
wallet?
Dr. Weil. I--I----
The Chairman. It is a hypothetical. We won't waste time on
that. But I will get to some specifics, if you will.
Dr. Weil. Yes.
The Chairman. First of all, the only reason that this is
still in court is because the agency is using taxpayer dollars
to appeal the ruling of the court, which the farmer--again, the
American citizen--had to use their private dollars to defend
themselves against their government.
And that--the government is the 800 pound gorilla in this
case, and the farmer won. And I quite honestly think you are
trying to teach that farmer a lesson in that, ``If you stand up
for your rights, we are going to pummel you,'' as the 800 pound
gorilla.
You stated that there have been 7,500 investigations.
Dr. Weil. Yes, sir.
The Chairman. And that there was $20 million collected from
those investigations, for 46,600 workers. So your average
investigation yields $2,666.
How much do you spend on those investigations? How much
have you spent of taxpayer funds on this court case?
Dr. Weil. On the 7,500 cases or on the cases----
The Chairman. On the 7,500 investigations, how much have
you spent?
Dr. Weil. I would be happy to provide you those figures. I
couldn't say offhand.
[The information referred to is located on p. 44.]
The Chairman. I would appreciate that.
And I would also appreciate--I would like to know how much
the government has spent in this case that, again, the court
has already ruled in favor of the farmer and the farmer is
having to use their private funds because you, as the 800 pound
gorilla in this case, have chosen to push them into the appeals
process.
You know that you can spend them into bankruptcy. You know
you can spend that farmer into bankruptcy. And there should be
recourse for the citizens of this country when the 800 pound
gorilla does anything and everything that they can to take
everything that they have. There should be recourse.
And there is an Equal Access to Justice Act that is out
there. And, quite honestly, I think that the farmers should be
compensated for everything that you have done to them, and it
should come out of the budget of your agency. And if that
happened one or two times, then a lot of this stuff would stop.
Mr. Avakian, thank you for being here.
Have you ever seen--when is the first time that you saw the
hot goods orders used with regard to perishable products?
Mr. Avakian. Mr. Chairman, the three farms that it was used
on in Oregon that Congressman Schrader spoke about is the first
time that we experienced the use of hot goods in Oregon, to my
knowledge.
The Chairman. And what dates were those?
Mr. Avakian. It was 2 years ago. Forgive me for not coming
up with the exact dates.
The Chairman. And they used it on three separate farms?
Mr. Avakian. That is correct.
I might add, Mr. Chairman, too, that, at the time, we took
a very strong position against the use of hot goods,
articulated that to the U.S. Department of Labor, and they have
not used the hot goods provision in Oregon since, to my
knowledge.
The Chairman. Thank you for standing up for the farmers.
And what are the common denominators--they have
acknowledged in their testimony here today that they have
specific things they are looking at and who they are going to
target with their investigations.
Have you seen a common denominator with who they are
targeting in their profiling of who they are going after?
Mr. Avakian. No, Mr. Chairman.
The Chairman. I yield the remainder of my time.
Mr. Avakian. Mr. Chairman, just to clarify, I do not have
any knowledge one way or the other with respect to that.
The Chairman. Mr. Schrader.
Mr. Schrader. Thank you, Mr. Chairman.
Commissioner Avakian, the Department of Labor has indicated
that this hot goods authority is absolutely necessary to compel
compliance among producers with perishable goods. They refuse,
apparently, to think of alternatives.
In your judgment, in your experience, could compliance of
potential violators be achieved with alternate means besides
imposition of hot goods on perishable products?
Mr. Avakian. Mr. Chairman, Congressman Schrader, oftentimes
when you are trying to catch a bad actor, it is not an easy
thing to do.
And, as I said earlier, it is important to aggressively
prosecute bad actors not only to protect workers, but to make
sure that the businesses that do follow the rules have a level
playing field.
And you want to use every tool at your disposal in order to
protect the good businesses as well as the workers. However, in
our system, administrative or judicial, there is always a
balance between respecting the Constitutional rights of people
that are in that type of an investigative or prosecutorial
process with the need to protect the workers.
In our judgment, the use of hot goods with perishable items
creates a situation in which there is much, much too much,
leverage on the part of the government to extract whatever type
of agreement would be necessary from a suspected, not proven,
bad actor. And that huge imbalance of power creates a
Constitutional due process problem.
And so we do believe that, whether or not that kind of
leverage would be effective in getting a result, it is just
inherently the wrong method to use and that we should rely on
the other tried and true and tested methods that we use in
investigations and prosecutions.
Mr. Schrader. In the case with the Oregon farmers in 2012,
the Department refused consistently to give virtually any
details of their investigation and the alleged violations.
What is the policy for the Oregon Department of Labor in
disclosing details of alleged violations to individuals?
Mr. Avakian. Mr. Chairman, Congressman Schrader, we do--
between our Civil Rights Division and our Wage and Hour
Division, we do, on average, over 5,000 investigations a year.
We receive over 60,000 calls a year from Oregonians with
questions about their rights on the job or in housing and, like
I said, respond to about 20,000 calls a year from Oregon
businesses that are looking for cooperative help in navigating
the regs in state and Federal laws.
So we have a good deal of experience in fielding questions
from business and from the public in these types of situations.
Generally speaking, what we look for is whether or not
there is probable cause that some type of violation is
occurring. So either somebody calls and gives us their story of
what is happening to them on the job or we get a tip from a
third party that there may be violations occurring.
And if we believe it is credible evidence, we send an
investigator or a team of investigators in order to interview
the worker, to get documents from the employer, interview the
employer.
If we believe that there is substantial evidence that a
legal violation has occurred, we issue formal charges and, at
that point, enter a prosecutorial system in which we, on behalf
of the people of Oregon, are trying to obtain damages for the
individual we believe was harmed.
And, in that process, the employer has the ability to
defend themselves in front of an administrative law judge, with
my position of Labor Commissioner being the eventual decider of
the case. That is the process we use.
Mr. Schrader. That sounds like a very different process
than what we have heard outlined with the Federal Department of
Labor at this time.
How closely does the Federal Department of Labor work with
you in investigations? My understanding, based on your
testimony, there is more investigations ongoing in Oregon as we
speak, several other farms being checked into. How much lead
time did you get on these folks coming to Oregon? How do you
work with the Department of Labor?
Mr. Avakian. Mr. Chairman, Congressman Schrader, in the
cases of the three blueberry farms a couple years ago, we
didn't know about those investigations until they were
occurring.
I must say that Dr. Weil has very graciously in recent
weeks called me personally, extended his hand in a cooperative
effort for our agencies to work together in the future to use
the best of our resources as efficiently as possible, and I am
quite encouraged by the reaching out that he has done in recent
weeks.
Mr. Schrader. So, how much notice did you get for the
investigations that are ongoing right now? You talked with Dr.
Weil a few weeks ago, apparently. How much--did he talk to you
about the investigations that, obviously, the Department plans,
months, maybe a year, in advance. Did he talk to you about
coming out to Oregon at that time?
Mr. Avakian. Mr. Chairman, Congressman Schrader, I think
you are referencing some recent investigations in the last
couple weeks on ten or eleven blueberry farms in Oregon.
We didn't have any idea of those investigations until they
were occurring. So we are looking forward to a very cooperative
future with the Department of Labor.
Mr. Schrader. It doesn't sound like things have changed
very much, with all due respect.
Dr. Weil--if the Chairman will indulge me just a little bit
here--two points I would like to hone in on here going forward.
You have testified that your agency has done over 600
education events across the country trying to inform producers,
manufacturers, whoever, about their rights.
The Department of Labor has had a Memorandum of
Understanding with the Oregon Farm Bureau along those lines. It
was actually canceled by the Department of Labor a few years
ago. It was specifically designed to help farmers know how to
comply with the Wage and Hours laws of our country.
In 2012, the Oregon Farm Bureau had asked the Department of
Labor, the Portland Director Genkos, with the Western Director,
Rosales, present, to review the MOU for education. You know
what they were told? And I will quote you here: ``We are an
enforcement agency, not an education agency.''
How do you reconcile that with your statement and what you
alluded to before?
Dr. Weil. Thank you, Congressman.
The spirit of what I spoke about at the beginning, the 600
outreach cases that I discussed, are specific to agriculture. I
can describe to you 24 different outreach efforts that we have
done just in the western region, many in Portland, over the
recent period of time where we have done outreach specifically
to employers and farm labor contractors.
Mr. Schrader. Why in my region is that not happening?
Dr. Weil. That is--many of these are in Portland. And I
would be pleased to provide you a list of these events.
[The information referred to is located on p. 44.]
Mr. Schrader. It seems like the director out west and in
the Portland area in particular is not reading your memos and
does not agree with you. I would appreciate it if you would
reach out to them and talk with them in a little more detail.
Dr. Weil. I would be happy to do so.
Mr. Schrader. The other concern I have that was alluded to
in testimony is: Where is the money? Where is the farmers'
money? The court vacated your decision. Where is their money?
Dr. Weil. Well, the court--that particular instance is
still in litigation; so, I am not quite sure.
Mr. Schrader. Well, where is the money? I mean, your agency
has their money. Where is it?
Dr. Weil. The money is kept in the Treasury----
Mr. Schrader. It is $\1/4\ million.
Dr. Weil. Oh. It is kept in the Treasury until resolution--
--
Mr. Schrader. It has not been returned to them even though
the court has vacated your decision?
Dr. Weil. Well, that indicates it is in litigation, as you
know. And so it would be inappropriate at this point until the
process has run its course or----
Mr. Schrader. No. I respectfully disagree on that account.
How did you determine how many workers there were? You
know, the farmers contested successfully in court that they
paid all their workers what they were due.
How did you determine that there were 1,100 additional
workers out there? You talked about time--this is one of your
time studies that you did?
Dr. Weil. Sure. Again, I can't speak about the particulars
of this case. I can say, in any agriculture investigation,
there is a process where investigators go to the fields in
order to ascertain the number of workers who are present----
Mr. Schrader. How do they do that, generally speaking?
Dr. Weil. By, basically, going to the fields, counting
workers, speaking to workers, and then speaking with employers,
looking at payroll records and, basically, triangulating----
Mr. Schrader. And how do you figure out that there are
missing workers? What does the agency do to figure out there
are missing workers?
Dr. Weil. Well, the calculations are based on an assessment
of the number of workers in the field at the time of the
investigation----
Mr. Schrader. How do you get that calculation is what I am
asking?
Dr. Weil. Oh, I see. By counting people. I mean, by----
Mr. Schrader. If they are not there, how do you count them?
Dr. Weil. If they are not there, they would not be counted.
Mr. Schrader. So, then, why is the agency worried about
1,100 workers that were not there?
Dr. Weil. Well, again, that regards the particulars of the
specific cases in litigation----
The Chairman. Well, I can actually tell you that you don't
know your own procedures. You actually have a model that you
use. There is a model that you use.
The model figured out that it was impossible for workers to
pick more than 60 pounds of berries in an hour. The model
determined that. They didn't go to the field. They didn't talk
to the workers about, ``How many can you pick in an hour?''
That wasn't done. It was based on a model. There was no time
study done at all.
As a matter of fact, there was a time study done after the
fact by a former Department of Labor investigator. He
determined, in a third picking--not the first, which is usually
the most bountiful, but the third picking--that the lowest
amount of berries picked was over 100 pounds. Top picker, 196
pounds. That is the real world, not a model. That is the real
world.
How many workers do you suppose this investigation has
found out of these 1,100 alleged workers identified with this
bogus model that you have used?
Dr. Weil. Representative Schrader, I cannot speak to the
particulars of that. I cannot--I cannot----
Mr. Schrader. I thought you might say that. I can tell you:
70, 74.
And how does the Department determine if a worker,
generally speaking, was on the farm and should get paid? How do
you find that worker?
Dr. Weil. That is very clear, sir.
Mr. Schrader. Oh, good.
Dr. Weil. When we undertake investigations, we go out to
the fields. We interview workers in the fields. We also look at
the payroll records of the growers. This is precisely why
record-keeping is an absolute bedrock----
Mr. Schrader. How do you find workers that you claim are
not on the payroll?
Dr. Weil. It is one of the challenges of enforcing the law
entrusted to our agency----
Mr. Schrader. How do you find them? What do you do?
Dr. Weil. We use----
Mr. Schrader. I am asking just a basic question.
Dr. Weil. Yes, sir.
Mr. Schrader. It is not a trick question.
Dr. Weil. I am attempting to, sir.
We use the payroll records that the employer is supposed to
keep. Often in significant and difficult cases where one of the
major problems is farmers have failed to follow the statute's
requirements of record-keeping, it makes it difficult to follow
up on those workers.
That is precisely why in the agricultural industry not only
do we need to move quickly----
Mr. Schrader. You are not answering the question, Doctor.
I am asking you: How do you find these workers that you
claim were on the farm? What is the policy?
Dr. Weil. If we don't----
Mr. Schrader. Apparently, you don't have a policy.
Dr. Weil. Yes, sir. If we don't----
Mr. Schrader. It is not very clear and it is not simple,
like you said 2 minutes ago.
Dr. Weil. If we don't have payroll records maintained by
the employer as required by the law, we have to use other means
to find those workers. We use--for instance, we have agreements
with the Mexican consulate to have them help us locate workers
who were denied their--the wages----
Mr. Schrader. I can tell you in this case in Oregon how you
did it. You are apparently, with all due respect, not very
knowledgeable about your policy or you don't have a policy,
either of which is a shame.
They advertised in the local paper or on the radio: ``Hey,
did anyone work at such-and-such farm during this time
period?''
And to the credit of the members of my community in the
State of Oregon, there were only 70 folks who said, ``Yes. I
worked there. Please give me some money.''
Dr. Weil. Right.
Mr. Schrader. Out of 1,100 opportunities, only a few people
walked up. Maybe a couple of them were on the farm. I don't
know. There is no way to actually know.
Where is my farmers' money? Does that money revert back to
the Treasury and not go to those farmers at some point in time?
Dr. Weil. Congressman, because of the nature of the
migratory workforce in agriculture, the challenges you describe
are very real. And that is why we have to use a number of
different methods to try to locate workers, in general, in the
agricultural industries, which are sometimes hard to find,
particularly----
Mr. Schrader. Where is the money?
Dr. Weil.--where the employer has not kept adequate
records.
Mr. Schrader. Mr. Weil, you keep not answering the
question, and that does not help you in your case.
I yield back, Mr. Chairman.
The Chairman. Mr. Yoho.
Mr. Yoho. Mr. Chairman, thank you.
I would like, Mr. Chairman, to have this put into the
record, that I have requested from the Department of Labor--Dr.
Weil--to have the figures for the investigations, numbers for
Fiscal Year 2005, 2009. And, sir, if you would kindly give me
that.
Dr. Weil. Yes, sir.
Mr. Yoho. And I want to kind of build a little bit on this
because this is something that has happened in our state.
If a producer from a state uses a labor contractor for his
labor needs that is certified by the Federal Government or the
state, are they certified by both entities, Federal Government
and state or just state? The labor contractors.
Dr. Weil. By the Federal Government, sir.
Mr. Yoho. So they are certified by the Federal Government.
Is there an additional--Mr. Avakian, is there an additional
certification they must get from a state--your state?
Mr. Avakian. Mr. Chairman, Congressman, our state certifies
farm labor contractors.
Mr. Yoho. In addition to the Federal Government?
Mr. Avakian. I actually don't know about the Federal
Government's involvement with the certification----
Mr. Yoho. Well, he just said that they----
Mr. Avakian. But we do.
Mr. Yoho. Whose responsibility--if I am the producer and,
say, I use between 45 and 50 workers in a growing season and I
am contracting with a contractor that is certified by the
Federal Government and he gives me a bill at the end of the
week, ``This is the amount of hours'' or, if it is a day rate,
``This is the amount that we pay out daily,'' whose
responsibility is it to track the hours of the individuals if
it is a fluctuating workforce? Is it the farmer or is it the
contract laborer?
Dr. Weil. In terms of Federal procedures, that is a
determination of joint employment that you are raising. And in
cases where an economic realities test would speak to the fact
that both parties are essentially employers, both parties would
be required.
Mr. Yoho. But I am hiring the contractor for the labor. He
is hiring the laborers. So you are saying that I am also hiring
the laborers individually and not just through the contractor;
so, my responsibility is to track all the hours, as the
producer?
Dr. Weil. As you know, in agriculture, those kinds of
relationships very common----
Mr. Yoho. They are.
Dr. Weil.--and joint employment is often found as part of
agriculture.
Mr. Yoho. But what does the law say? I mean, are you saying
both of us are responsible, according to the law, or just the
contractor?
Dr. Weil. If on the basis of the particular facts and
particularly in terms of the activities undertaken by both
parties they are both exerting employment-type relationships
with the workers in the field, they would both be responsible.
They would both be jointly----
Mr. Yoho. But I am only paying one entity. I am paying the
contractor.
The reason I bring that up is there is a case right now
where we have a guy--they went after the contractor. He did not
have the money. And so they sued the farmer. It went on for 4
years. It has ruined the farmer. And he just got a settlement--
or a judgment of $100,000 that has pretty much ruined him.
Young fellow. Young farmer.
And it was brought on by a nonprofit, Florida Rural Legal
Services, that--it just seemed like intimidation, is what it
was, because it came down to--and this is one of my other
questions.
If you have an investigator found to offer a decreased fine
for a violation if you pay now--and you said they are not
allowed to do that--if you were to find that, that one of your
investigators did that, do you have the authority to fire that
employee?
Dr. Weil. If we--if--certainly, if an investigator was
undertaking activities that are against the procedures that we
have established and the training and the guidelines in the
Field Operations Handbook and a number of different
subregulatory pieces we have, an investigator not following
those protocols would obviously be subject to discipline.
Mr. Yoho. Can you fire them?
Dr. Weil. Well, it would, again, be based on the particular
facts of a case. But in a case of a significant violation,
disciplinary actions could include firing that worker. Yes,
sir.
Mr. Yoho. Because we hear all the time you can't fire a
government employee. And certainly--I was on Foreign Affairs
when Ms. Clinton said you can't fire anybody in the government.
And that is something the public doesn't like because we are
accountable in the private sector.
I have one last question. The laws and the regulations that
get written that come out to the farmer a lot of times don't
seem like they are benefiting the farmer to make them more
productive--or not more productive--to protect their rights.
I know we want to protect the rights of the worker and we
also should protect the ability of the farmer to farm, to
produce a product, to hire the worker. But, I mean, we have
people that come down out of the Department of Labor
investigating Porta Potties on a farm and are using GPS
measuring devices and, if they are over 10 apart--or 10
beyond what they are supposed to, it is an automatic fine.
If they have a trash can in their field for trash and the
hole is bigger than 4" on top diameter, it is a fine. If you
take a plastic bottle out in the field picking watermelons,
this is a fine. But if I take an open container of water, it is
not.
I mean, these things just don't seem like common sense. You
know, I want somebody to have water in the field. I think
sometimes we overlook what we are trying to accomplish.
I want people hydrated in the fields and whether they have
a bottle of water or an open glass of water, does it really
matter? And if the hole in my garbage can is 6" versus 4", does
that really matter?
Dr. Weil. If I may respond, Congressman?
The Chairman. His time has expired. I apologize.
Mr. Costa.
Mr. Costa. Thank you very much, Mr. Chairman. I appreciate
you holding this hearing as it relates to the impact of
enforcement activities on specialty crops of which we grow 300
in California.
I have votes that are imminent down the hall in the Natural
Resources Committee. So I don't know if I am going to be able
to complete my 5 minutes of questions. I will submit them. But
let's have a go at it here.
Administrator Weil, as you know--or I hope you know--75 to
80 percent of California's farm work is done through farm labor
contractors. I want to pursue the same line of questioning that
our previous colleague was asking.
These contractors are employers for all the workers. But
when the Department of Labor goes after a contractor based on
these FLSA allegations, the Department will also put hot goods
order on the grower or the packinghouse to whom the contractor
is supplying the workers, forcing the grower or the packer to
pay off contractors' back wages, even though they are not the
employer and not required to make these payments.
What steps is the Department of Labor taking to determine
who the actual employer is before extracting these payments
from the grower or the packers? And why are you going after
those folks who, obviously, are not employing the workforce?
Dr. Weil. Thank you, Congressman.
We have established economic realities tests and factors
that we look at in order to ascertain whether or not there is
joint employment present not only in agriculture, but in
general.
Mr. Costa. Well, but--hold on.
The second joint employment process is a situation in which
the contractor may have workers in multiple farms, multiple
packinghouses. That is the way the workforce is employed.
And so what--under the law, what gives you the approval to
make--to attach both?
Dr. Weil. Both the law and regulations create the series of
tests and courts have also provided a set of tests regarding
who decides on what fields will be harvested, time of work, the
type of work that should take place, how to perform the work.
Mr. Costa. Yes. But these hot goods----
Dr. Weil. All of these activities would determine----
Mr. Costa. You are confiscating or putting a hold on these
hot goods. You are taking the very livelihood of these packers
or these growers. I mean, because these are highly perishable
crops.
I mean, after a berry crop is harvested, how much time does
the farmer have before he or she starts suffering economic
harm? It is almost immediate. These are perishable products.
Were a farm is prevented from selling its harvest and then
forced to take months to defend itself in court against claims
by the Department of Labor, how do you survive?
Dr. Weil. As I have said, the investigator does not have
the right to seize the good. The investigator, based on the
findings of his investigation in consultation with the district
and regional office, makes a determination and asks if the
grower or the contractor will voluntarily not ship goods until
resolution of the violation and compliance is found.
Mr. Costa. Mr. Chairman, I have to go vote, but I am
frustrated because I would really like to have an opportunity
to ask questions of both of these two witnesses. I would like
to submit these questions for the record. I would like to
revisit this.
And thank you very much. I have to go.
The Chairman. Thank you, Mr. Costa. And I apologize. I know
sometimes the schedules run together.
We will get both of you his written questions and would
appreciate your responses, and they will be included as part of
the official testimony.
I don't have any further questions at this stage. Before we
adjourn, I would invite the Ranking Member, Mr. Schrader, for
any closing remarks that he may have.
Mr. Schrader. I will be brief. And I apologize for the
length of my questions and testimony heretofore.
But this is a big issue. It is a very big issue. And as
Commissioner Avakian has testified and responded to questions,
it is about due process. It is a shame when Americans have
their own government violating basic due process.
The Department of Labor has clearly done that.
Doctor, it has been tough for you to even answer some very
basic questions about policies for finding workers and where
the money is, how you decide what farms you go into and onto.
And the fact is that you weren't doing the education. Now,
maybe there is something wrong with the Department of Labor in
my region. Maybe that is the problem. I hope you look at that
very, very seriously. And I hope the Department reviews its
procedures.
Clearly, there is not much, that this Congress usually
agrees on. But it seems like this entire Committee--Republican,
Democratic, North, South, East, and West of this great
country--agree the Department of Labor is wrong in using this
hot goods provision on perishable agricultural products.
My esteemed colleague from Oregon, the Commissioner, also
agrees it is inappropriate. I suspect most Labor Commissioners
around this country would come to that same conclusion.
We do have a bill that the Chairman and I have put out. I
would hope there would be interest in Congress in cosponsoring
this simple bill which would remove perishable products from
the hot goods provision.
It was never intended to be that way. I think our
Forefathers were pretty smart in establishing a lot of the
procedures and never could conceive that something like this
could be twisted in such a fashion as to prosecute and
persecute, coerce and extort money, from hardworking American
family farmers.
And I yield back, sir.
The Chairman. Thank you, Mr. Schrader.
And I again want to reiterate what I said at the start,
that I nor do I believe anybody else on this Committee,
Democratic or Republican, condones violations of Fair Labor
Standards Act.
I think that it has been pretty uniform among the
Committee, as Mr. Schrader said, Democratic and Republican,
that we believe this is an unfair use of the hot gods
provision.
I am somewhat taken aback that the Department of Labor
won't simply say, ``We will use the other tools that we have
instead of continuing to use the hot goods provision.''
Certainly, I hope that our language will pass and that will
leave you with reasonable tools to do what needs to be done to
enforce the intent of the law.
If I could, I would give the farmer back his money with
interest. If I could, I would take his legal fees out of your
budget and I would give it back to him. But I can't, and you
know it. Every bureaucrat up here knows that we can't do those
things.
But I will tell you it has reinvigorated my desire to give,
through the Equal Access to Justice language, the rights for
the United States citizen who, when they have been abused by an
agency, seek recourse from that agency for the damage that has
been done to them.
As for now, I would like to apologize to those farmers that
this has been done to. I think that your Constitutional rights
were violated. I think that you have been treated unfairly. And
I want to say thank you for being willing to put your money and
your assets at risk and to challenge this agency in the courts
of this land as they need to be challenged.
And the only reason this issue is still in court is because
the Department of Labor has the unlimited resources of the
United States Government to continue to appeal these decisions
when they know good and well that the United States citizen
does not.
With that, we are adjourned.
[Whereupon, at 11:50 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Statement by Hon. Greg Walden, a Representative in Congress
from Oregon
Thank you, Chairman Scott, Ranking Member Schrader, and Members of
the Committee for the opportunity to provide testimony today on the
troubling enforcement tactics utilized by the U.S. Department of Labor
on Oregon farmers.
In August of 2012, the U.S. Department of Labor (DOL) implemented
hot goods orders, stopping produce shipments on several blueberry farms
in Oregon's Willamette Valley for alleged violations, none of which
were provided in detail or in writing. In at least one case, in order
to remove the hold on their produce, the farmer was required to pay a
$170,000 fine and sign a consent judgment acknowledging guilt and
waiving their right to appeal.
Shortly afterward, I joined all of my colleagues from the Oregon
Delegation--Republican and Democrats--in writing to the Secretary
requesting details on these heavy-handed tactics.
While the Department was able to inspect, fine and process a farm's
case in about a week and a half, it took 6 months and repeated prodding
to get a written response to our letter.
Unfortunately, the vague response we received failed to provide
details on how and when these tactics should be used to enforce labor
laws and left questions and uncertainty for farmers across Oregon.
Earlier this year a U.S. District Court ruled against DOL's action,
stating that ``. . . the validity of DOL's calculations could not be
determined through any sort of deliberate process.'' And that ``. . .
such heavy handed leverage is fraught with economic duress brought
about by an unfair advantage.''
E-mails received via a Freedom of Information Act request by the
Oregon Farm Bureau detail confusion between the various levels of the
agency regarding inspectors' calculations. These documents also reveal
a disturbing coordinated effort to alter discrepancies in various
inspectors' actions into a single narrative, likely because of the
intense outside interest in the cases.
Harvest is well underway this summer across Oregon and once again
farmers are wondering if they will find themselves subject to these
heavy-handed enforcement tactics and have their highly perishable
produce held hostage while being forced waive their right to appeal.
No one is advocating for unfair labor practices, but all Americans
have a Constitutional right to due process and deserve a clear
understanding of what to expect from an investigation by a federal
agency that is funded by their hard earned tax dollars.
I appreciate the Committee holding this hearing to shed some light
on the tactics being used by the Department of Labor and to hopefully
bring the clarity that farmers need to continue growing their
businesses and producing the quality fruit we all enjoy every summer.
______
Supplementary Information Submitted by David Weil, Ph.D.,
Administrator, Wage & Hour Division, U.S. Department of Labor
Insert 1
Mr. Schrader. Why then, all of a sudden, this new-found
interest in using hot goods in perishable products? Why was
that determined to be something that hadn't been done before,
and the last few years seems to have been popular with the
Department?
Mr. Weil. Well, I would first point out and I would be happy
to look back prior to the period where you ask your question,
but from 2001 to 2008 during President Bush's Administration,
we used the authority 17 times. And then we used it 11 again up
until--in terms of closed cases since 2009.
Mr. Schrader. These were all perishable products?
Mr. Weil. These are in agriculture.
Mr. Schrader. In perishable products?
Mr. Weil. Well, yes, I mean, I would certainly acknowledge
agriculture as perishable products.
Mr. Schrader. Well, I guess I would like after the hearing
for you to get me that information. There is a big difference--
--
Mr. Weil. I would be happy to.
See following table for information regarding the years of each of
the 28 cases we've identified and the ag commodity that was involved in
each case FY 2001-FY 2013.
Breakdown of WHD Investigations Involving ``Hot Goods''
------------------------------------------------------------------------
Section 6/ Section
FY Trade Name State Commodity 7 12a
------------------------------------------------------------------------
2001 Jesus Ybarra TX Cabbage X
2001 Willoway OH Nursery Products X
Nursery
2001 Whitehouse OH Apples X
Fruit Farms,
Inc.
2001 Bauman OH Apples X
Orchards
2001 Joe Frank TX Watermelon X
Lopez
2001 Zappala Farms NY Onions X
2001 Anderson NM Peppers X
Enterprises,
Inc.
2001 JM Farming CA Strawberries X
2002 Easterling GA Onions X
Farms
2002 Ruben CA Garlic X
Carrillo FLC
2002 Agri-Care CA Blueberries X
Production
Specialists
2003 Aleander TX Onions X
Gonzalez,
FLC
2003 Plunkett, FL Watermelon X
Percy Eugene
2004 Jensen Farms CO Onions X
2006 Gregorio GA Onions X
Tlacuatl
2006 Taylor Farms TX Cantaloupe X
2008 Taylor Farms TX Cantaloupe X
2009 Caston AR Blueberries X
Blueberries
2009 Caston AR Blueberries X
Blueberries
2010 Cale Blocker GA Onions X
2010 Armando Rivas AZ Peppers X X
2011 DeBruyn TX Onions X
Produce/
Rangel,
Imelda
2011 Jose CA Lettuce X
Escamilla
LLC
2012 Hoffman Farms OR Blueberries X X
2012 Greenworld, CA Asian Vegetables X
Inc.
2012 Jorge Castro CA Strawberries X
Farms
2013 Otani Farms HI Onions X
2013 Vicente Farms WA Blueberries X X
Enterprise
------------------------------------------------------------------------
Source: Wage & Hour Division (WHD) August 2014.
Insert 2
Mr. Yoho. . . .
I want to move on to something else. You stated between
Fiscal Year 2009 and 2013 Wage and Hour concluded nearly 7,500
ag investigations. Do you have figures for the years of 2005 to
2009, the amount of active investigations that were concluded?
And if not, can you get me those.
Mr. Weil. I could. I would be happy to get you those.
The number of investigations in agriculture that were conducted
between FY 2005-FY 2009 is 7,502.
Insert 3
The Chairman. . . . .
How much do you spend on those investigations? How much have
you spent of taxpayer funds on this court case?
Mr. Weil. On the 7,500 cases or on the cases----
The Chairman. On the 7,500 investigations, how much have you
spent?
Mr. Weil. I would be happy to provide you those figures. I
couldn't say offhand.
WHD does not construct and evaluate resource requirements based on
the unit cost of an investigation. In FY14, WHD's overall budget was
$224,330,000 which helps fund approximately 1,800 FTE, including around
1,200 enforcement personnel to enforce more than a dozen different laws
and a wide variety of labor, safety, and health standards. WHD must
deploy resources strategically not only to enforce these statutes but
also to ensure compliance among the approximately 7.5 million
establishments covered by these laws. While impact cannot be measured
by back wages alone, it is worth noting that $2,666 in back wages is a
significant amount for an agricultural worker given that Occupational
Employment Statistics data indicates that the median annual wage of
agricultural workers is $18,710. See http://www.bls.gov/oes/current/
oes452092.htm.
Insert 4
Mr. Weil. Thank you, Congressman.
The spirit of what I spoke about at the beginning, the 600
outreach cases that I discussed, are specific to agriculture. I
can describe to you 24 different outreach efforts that we have
done just in the western region, many in Portland, over the
recent period of time where we have done outreach specifically
to employers and farm labor contractors.
Mr. Schrader. Why in my region is that not happening?
Mr. Weil. That is--many of these are in Portland. And I would
be pleased to provide you a list of these events.
List of Agriculture Outreach in the Northwest Region
------------------------------------------------------------------------
------------------------------------------------------------------------
Our Western Region conducts a number of outreach events where the
target audience is agricultural employers and worker advocacy
organizations. Below are a 24 examples of our efforts in Oregon,
Washington, and Idaho in the last two years:
------------------------------------------------------------------------
1 3/18/13 WHD staff hosted an outreach and compliance
assistance event for Oregon's agricultural
employers and farmworkers in Portland.
2 3/19/13 WHD staff hosted an outreach and compliance
assistance event for Washington's
agricultural employers and farmworkers in
Seattle.
3 11/13/13 Portland Oregon District Office's conducted a
presentation covering labor standards for
agricultural employers at the 13th Annual
Willamette Valley Ag Expo. The presentation
provided coverage principles, exemptions and
regulatory requirements for agricultural
employers under the FLSA and MSPA. The
division also provided informational
materials and included a question and answer
session following the presentation.
4 12/4/13 Portland District Office (PDO) provided a
presentation on agricultural labor standards
for farm workers at the Oregon Human
Development Corporation's (OHDC) staff
meeting. OHDC serves well over 300 farm
workers a year. PDO provided the staff with
FLSA, Child Labor and MSPA training.
5 12/12/13 Portland District Office hosted the Forest
Workers Partnership meeting. The two hour
meeting convened to discuss opportunities to
improve labor conditions in forestry
activities.
6 1/14/14 Portland District Office attended the
quarterly meeting of Oregon Foreign-Born
Human Trafficking Task Force held at the US
Attorney's office in Portland Oregon.
7 1/24/14 Portland DO spoke to students at the
University of Oregon's High School
Equivalency Program about agricultural labor
requirements under the FLSA and MSPA.
8 2/13/14 Staff of the WHD's Western Region met with
staff at the Mexican Consulate in Portland.
9 2/19/14 Staff of WHD's Western Region met with
representatives from federal and state
agencies, advocacy groups and community-based
organizations concerned with protecting
workers labor rights.
10 2/25/14 The PDO met with the USDA Forest Service
regarding the applicability of MSPA to
certain firefighting jobs.
11 2/26/14 Portland DO staff provided a training
presentation on agricultural labor laws at
the Ninth Annual Production Workshop for
Oregon's Commercial Raspberry and Blackberry
Growers at the Wellspring Conference and
Wellness Center in Woodburn, Oregon. The
event was sponsored by industry, the Oregon
State University, and the Oregon Raspberry
and Blackberry Commission.
12 3/6/14 WHD Western Region staff provided training
workshops in AG Labor Compliance for the
first line supervisors, field managers,
growers and processors of the WA Blueberry
and WA Red Raspberry Commissions members in
Vancouver, Washington. This training covered
FLSA, MSPA and H2A basic provisions and best
practices and was organized by the Washington
Blueberry Commission's Executive Director
Alan Schreiber.
13 3/13/14 WHD Western Region staff met in Boise, Idaho,
at the Mexican Consulate with representatives
from federal and state agencies, advocacy and
faith-based groups, unions and other
community-based organizations concerned with
protecting workers labor rights.
14 4/7/14 Portland DO CORPS spoke at the Woodburn Oregon
Community Forum, which is comprised of local
Latino leaders in government, business and
community. WHD provided information
concerning Wage and Hour requirements.
15 4/8/14 Portland DO provided a comprehensive labor
laws training for the USDA Forest Service's
contracting officers and representatives at
one of their annual meetings held in Baker
City, Oregon. Presentations incorporated
FLSA, SCA, DB, MSPA and H-2B power points,
followed by question and answer sessions.
16 5/1/14 Portland DO provided a comprehensive labor
laws training for the USDA Forest Service's
contracting officers and representatives at
one of their annual meetings held in
Pendleton, Oregon. Presentations incorporated
FLSA, SCA, DB, MSPA and H-2B power points,
followed by question and answer sessions.
17 5/16/14 Portland DO spoke to students at the
University of Oregon's High School
Equivalency Program about agricultural labor
requirements under the FLSA and MSPA,
including requirements under the FLSA in non-
farm work.
18 5/19/14 PDO attended and held a booth at an event
sponsored by the Woodburn Oregon School
District's Migrant Program Welcome Center.
WHD provided fact sheets in Spanish, covering
MSPA and FLSA, and provided technical
assistance for those inquiring.
19 5/31/14 Nearly 600 people attended the La Familia-
Cimiento para la Eternidad convention in
Caldwell, ID on May 31, hosted by Sal y Luz
Radio Catolica of Boise. WHD staff
participated and distributed resources at the
venue, providing assistance in Spanish to
workers with inquiries related to their hours
and wages.
20 5/30/14 WHD Administrator David Weil spoke to an
audience in Oregon comprised of worker
advocacy groups and governmental agencies to
discuss worker issues and the meaningful
efforts made by the organizations to combat
wage violations.
21 6/1/14 Portland DO staff provided an information
booth at the Mexican Consulate in Portland,
Oregon. Staff highlighted the laws and
requirements that the WHD enforces,
particularly relating to the FLSA and MSPA,
during the introduction presentation.
22 7/7/14 PDO attend the State of Washington's Labor &
Industries and Worksource Columbia Gorge
outreach event in White Salmon, Washington.
The event focused on providing needed labor
protections information to primarily farm
workers who live and work in the Columbia
Gorge area. The area is home to vast acres of
wine grapes, cherry, pear, and apple orchards
and where one of the world's largest blocks
of pear orchards resides. Portland CORPS
Karen Clark attended the event and provided
FLSA and MSPA.
23 7/17/14 The Portland DO co-hosted an event with the
Portland Mexican Consulate, to provide H-2B
and H-2A outreach to forestry workers in the
Medford, Oregon area. A number of public
agencies, nonprofit organizations and church
groups participated and provided their
materials and information.
24 7/22/14 The Portland DO co-hosted and event with the
Boise Mexican Consulate, to provide H-2B and
H-2A outreach to forestry and ag workers in
the Twin Falls/Burley Idaho area.
------------------------------------------------------------------------
______
Submitted Questions
Questions Submitted by Hon. Jim Costa, a Representative in Congress
from California
Response from David Weil, Ph.D., Administrator, Wage and Hour Division,
U.S. Department of Labor
Question 1. In California, 75-80% of farm work is done through farm
labor contractors. These contractors are the ``employer'' for all of
these workers, but when DOL goes after a contractor based on an FLSA
allegation, the Department will also put a ``hot goods'' order on the
grower or packing house to whom the contractor supplies workers,
forcing the grower or packer to pay off the contractor's back wages
even though they are not the ``employer'' and not required to make
these payments. What steps is DOL taking to determine who is the actual
``employer'' before extracting these payments from growers or packers?
Why is DOL punishing these growers and packers for the alleged
violations by the contractor?
Answer. Under the Fair Labor Standards Act (FLSA), the grower,
processor, and/or packer may also be an employer of farm workers hired
by a farm labor contractor because of the existence of a joint
employment relationship. Joint employment means that an individual is
employed by two or more persons or entities at the same time. Where a
joint employment relationship exists, each of the employers must ensure
that the worker receives all employment-related rights. The Department
must examine all the facts of a particular case to make a determination
with regard to the nature of the employment relationships, and each
case is different. Depending on those facts, the joint employers could
be any combination of the grower, the processor, and/or a farm labor
contractor. In determining whether a joint employment relationship
exists in agriculture, the Department looks at many factors, such as
whether the grower sets the time for work; decides where on a
particular field the work should take place; tells the worker how to
perform the work; does some of the recordkeeping for the workers; or,
pays employment taxes.
Even if the grower, processor, or packer is not a joint employer,
the FLSA's hot goods provision may apply to them. The application of
the provision is not limited only to employers. The FLSA, in relevant
part, makes it illegal to ship, deliver, or sell goods in commerce that
were produced in violation of the statutory minimum wage and overtime
requirements. See 29 U.S.C. 215(a)(1). This provision empowers a court
to stop or prevent the flow of hot goods through interstate commerce so
that employers who violate the FLSA do not have an unfair competitive
advantage over employers who comply with the law.
Last, it bears noting that the Department does not issue hot goods
``orders.'' The Department can only request that a federal court do so.
The court decides the merits of the case, and the employer is provided
an opportunity to argue against the order. For additional information
on the hot goods provision, please see Fact Sheet 80, which can be
found at http://www.dol.gov/whd/regs/compliance/whdfs80.htm.
Question 2. Since 1938, how many times has DOL used the ``hot
goods'' provision against an agricultural employer? How many of those
times were in the past 5 years?
Answer. Hot Goods-related data from 2001-2014 has previously been
provided to the Subcommittee. One of our earliest ``hot goods'' cases
occurred in 1946 when the Department obtained injunctions from federal
court to restrain vegetable packers in Mississippi from shipping their
goods in interstate commerce because the vegetable products were
processed and packed by minors, many under 14 years of age, in
violation of the FLSA's child labor provisions. The Department does not
have comprehensive, aggregate data prior to the establishment of our
current case management IT system in 2001.
Question 3. In the past, DOL would allow growers to pay the back
wages claimed into an escrow account, some or all of which would be
returned to the grower if the claims were not upheld. Why did the
Department stop this process?
Without using the ``hot goods'' provision against growers or
packing houses, would DOL still be able to pursue administrative
actions to collect back wages that might be owed?
Answer. The Department continues to use escrow, depending upon the
facts of a particular case. Escrow is one of many tools available to
the Secretary and growers, where appropriate, in negotiations to
resolve FLSA investigations expeditiously and finally. Toward that end,
when the Department determines that an employer is in possession of
goods that have been produced in violation of the minimum wage,
overtime or child labor provisions of the FLSA, we will work with the
employer to resolve the matter. First, the Department will provide
information explaining its findings and request that the employer
voluntarily agrees not to ship the goods. Then, the employer will be
provided ample opportunity to present its evidence or any other
relevant input. Based on this information, the matter may be addressed
with the payment of back wages, using escrow as appropriate, and a
consent judgment, when necessary. The Department's objection to
shipment will then be lifted and the goods can be shipped.
In creating the hot goods provisions, Congress was specifically
focused on protecting law-abiding employers from unfair competition due
to goods moving in commerce that were produced in violation of the
FLSA's minimum wage, overtime or child labor requirements. Preventing
unfair competition is an explicit goal of the Act. Remedies other than
use of the hot goods provision are available to obtain back wages. For
this and other reasons the hot goods provision is used carefully and
selectively. But, where the Department finds violations of the FLSA,
use of the hot goods provision may be the most appropriate remedy.
Question 4. In the agreement that Wage & Hour requires growers to
sign, there is a provision preventing the grower from challenging the
allegations before an administrative law judge or in court. Why is that
included in the agreement, and doesn't that take away the grower's
right to due process?
Answer. The Wage and Hour Division and the grower sometimes enter
into a consent judgment, which is a settlement agreement that is
approved by a court upon the agreement of all parties involved in an
action to settle the matter. The purpose of including a provision in
the consent judgment that prevents either of the parties to the
agreement from challenging it in court is to achieve a final agreement
putting the litigation to rest, ensuring that it cannot be contested or
re-litigated in the future. As with any settlement agreement, consent
judgments are the product of compromise, with both the Department and
the employer accepting certain conditions in an effort to finally
resolve the matter. Both parties to the consent judgment are generally
represented by counsel, and an employer is always free to reject a
consent judgment. Thus, the grower's right to due process is not
infringed upon in any way.
Question 5. When DOL issues a ``hot goods'' notice to a packing
house that services dozens or hundreds of individual growers, it
prevents those growers from selling their crops, even when no
allegations have been made against them. How does DOL justify this?
Answer. As noted above, the FLSA makes it illegal to ship, deliver,
or sell goods in commerce that were produced in violation of the
statute's minimum wage and overtime requirements. See 29 U.S.C.
215(a)(1) The section 15(a)(1) hot goods provision applies to ``any
person'', which is defined to include any individual, partnership,
association, corporation, or any organized group of persons engaged in
the movement of hot goods. Thus, application of the hot goods provision
is not limited to the employer of the worker(s) who produced the hot
goods or to the owner of the hot goods. A packing house, because it may
be engaged in the movement of hot goods, is also a covered entity under
the statute which may not ship a grower's goods that have been produced
in violation of the FLSA's wage provisions.
Sometimes shipment of hot goods to a packing house will affect
other goods. This is because, as noted above, inclusion of hot goods as
an ingredient or part of other goods will render them all hot goods.
See 29 U.S.C. 203(i) (goods include ``any part or ingredient
thereof'').
The Department takes steps to assist packing houses and other
business that come in contact with hot goods in avoiding liability
under the statute. For example, the Department contacts the packing
house and other recipients of the request not to ship the hot goods,
allowing them to take appropriate actions to segregate, if possible,
such goods so that they can continue their business with regard to
goods from their other clients until the situation is resolved.
Response from Hon. Brad Avakian, Commissioner, Oregon Bureau of Labor
and Industries
Question 1. In the Federal court case involving Pan-American Berry
Growers and B&G Ditchen in your home state of Oregon, DOL put ``hot
goods'' notices on $5-$6 million in berries. If the growers had not
agreed to pay the back wages claimed by DOL on the spot, what would
have happened to those berries?
Answer. Thank you for the questions and opportunity to discuss the
Oregon Bureau of Labor and Industries' perspective on the appropriate
use of the ``hot goods'' provision of the Fair Labor Standards Act.
While I cannot speak for the U.S. Department of Labor, it's my
understanding that the agency would have attempted to secure a ``hot
goods'' order and if successful, prohibit the sale or shipment of the
perishable berries.
Question 2. In that case, the judge ultimately overturned those
agreements, finding that DOL's conduct amounted to ``heavy handed
leverage . . . fraught with economic duress brought about by an unfair
advantage.'' Do you agree that DOL's use of a ``hot goods'' order at
harvest time presents an ``unfair advantage'' for the Department that
could be used to make a farmer sign an agreement under duress?
Answer. I agree with the court's analysis and concern about the
economic duress that the ``hot goods'' provision can place on a farmer
facing the loss of a perishable crop.
In my opinion, the imbalance of power in this type of hot goods
action obscures any meaningful due process during the enforcement
action and risks violating Constitutional search and seizure and
commerce clause protections. Requiring farmers to waive their rights of
appeal--even if future findings of fact or law would exonerate the
farmers--runs contrary to basic rules of fairness.
Question 3. If DOL prevented a farmer from selling his or her crop
after it was harvested, what would the impact be on that farm?
Answer. In the case of the Oregon farmers, the farm operations
would be unable to gain revenue from the crops and, therefore, may be
unable to make payroll or continue operations for that growing season.
Question 4. After a berry crop is harvested, how much time does the
farmer have before he or she starts suffering economic harm? Would a
farm prevented from selling its harvest and forced to take months to
defend itself in court against claims by DOL be able to survive that?
Answer. It's my understanding that the economic harm to the Oregon
farm in question would have been severe, immediate and potentially
catastrophic.
The actions of a farmer facing the choice of having blueberries
spoil in a warehouse during a protracted legal process are far from
voluntary when he or she signs a hot goods consent judgment.
Question 5. A farm's main asset is its land, isn't that right? And
a farmer can't move that land can he? So, if DOL were able to prove
allegations against a farmer under the FLSA, what would stop DOL from
collecting that money against the farmer after proving its case at a
hearing?
Answer. Our agency believes that we can have strong wage
enforcement while still protecting the due process rights of farmers.
For this reason, we regularly seek monetary collection after proving
our agency's case at an administrative hearing.
When applied appropriately, use of the ``hot goods'' provision can
be a powerful and effective tool in wage enforcement. But ``hot goods''
should be limited to the enforcement of non-perishable items such as
those traditionally associated with the garment industry.
Thank you for your questions and interest in this important issue.