The “hot goods” abuse case against Oregon farmers by the Department of Justice has seen a victory in the courtroom on behalf of the farmers, and now seen more attention from national media. More recently this week an editorial in the Wall Street Journal.
Wall Street Journal Editorial 3-18-14:”Labor’s Blueberry Police”
When conservatives argue that an overbearing regulatory state suppresses hiring and investment, doubtful liberals often say: Show us an example. Please meet the growers in Marion County, Oregon.
In late July 2012, officials from the Department of Labor’s Wage and Hour Division visited Pan-American Berry Growers, B&G Ditchen and E&S Farms for spot inspections. Nothing out of the ordinary here. Labor enforces federal minimum-wage and child-labor laws and often conducts surprise investigations of farms, inspects payroll records and interviews workers.
The Oregon growers didn’t think they had reason to worry. Labor had never sanctioned them. They also kept good payroll records and paid workers per bushel picked. Paying minimum wage—at that time, $8.80—wasn’t an issue because many workers, paid by the bushel, picked so many blueberries that they earned double that rate, or more.
Yet the Labor Department’s Wage and Hour division district director, Jeff Genkos, accused the growers of minimum-wage violations and declared the blueberries “hot goods” under the 1938 Fair Labor Standards Act. This charge is usually reserved for, say, T-shirts sewn by child laborers. The effect was to stop the fruit from being shipped to customers. He then ordered the growers to pay back wages and penalties and asked them to sign away any right to appeal the deal.
This represented a huge change in Labor’s traditional enforcement practices. Formerly, companies accused of hot-goods violations paid money into an escrow account until the case could be litigated. But Labor ordered the Oregon blueberry growers to pay the money directly into the government’s coffers, with minimal evidence of the alleged violations.
This put the growers in an impossible spot. Either they could collectively pay $240,435 or let millions of dollars’ worth of berries rot. And they only had a day or two to make a decision. They did what any prudent employer would do: They paid the money, and the hot goods order was lifted.
Over the next year, the owners tried to get access to the basis for Labor’s calculations about their workplaces by filing Freedom of Information Act requests and rallying a bipartisan group of Congressmen to petition the department for more information. It turns out that Labor’s bureaucrats had divined that the average worker could only pick around 60 pounds of blueberries an hour, some 30 pounds below what workers usually pick. They then counted the number of workers employed and concluded the growers must have had workers employed off the books.
Two of the growers—Pan-American Berry Growers and B&G Ditchen—sued, though both had signed the consent agreement. In January, Oregon magistrate judge Thomas M. Coffin ruled for the growers. “In essence, to avoid the potential loss of millions of dollars worth of berries, defendants had to agree to the DOL’s allegations without an opportunity to present a defense or confront the DOL’s evidence in an administrative or court hearing,” he wrote.
Labor has challenged Judge Coffin’s findings and asked another judge to review his conclusions. The growers have reiterated their position, and both sides are waiting for the ruling. For now, however, employers under Labor’s sway should prepare for the new regulatory model: Sentence first, verdict later.
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