A bipartisan Congressional panel has criticized the U.S. Labor Department’s policy of invoking the “hot goods” provision of labor law to force financial settlements from farmers.
“It coerced farmers into forfeiting their rights by threatening their very livelihoods,” said Kurt Schrader, D-Ore., during the July 30 hearing before a House subcommittee on horticulture.
The hearing focused on DOL’s actions in 2012, when the agency accused three Oregon blueberry farmers of violating the federal minimum wage law.
The agency threatened to block shipment of their crop as unlawfully produced “hot goods” unless they agreed to pay $240,000 in fines and alleged back wages.
To avoid spoilage of their fruit, the farmers agreed to the hefty settlements and waived their right to challenge the agency’s findings in court.
However, two of the three farms later sought to void those consent decrees.
A federal judge overturned those deals earlier this year, finding they were unlawfully coercive, but the DOL is seeking to appeal that ruling and refuses to return the money.
The DOL wants to use the “hot goods” provision as a tool of fear and intimidation, which was never the intent of Congress, said Rep. Austin Scott, R-Ga., the subcommittee’s chairman.
Scott and other committee members repeatedly asked why the agency wouldn’t return the money and questioned its decision to continue litigating the case.
“I quite honestly think you’re trying to teach that farmer a lesson, that if you stand up for your rights, we’re going to pummel you,” said Scott. “You know you can spend that farmer into bankruptcy.”
Brad Avakian, commissioner of Oregon’s Bureau of Labor and Industries, testified that he was troubled by the DOL’s actions.
It would be a different matter if the agency took possession and sold the blueberries, then kept the proceeds in trust until the dispute was resolved in court, Avakian said.
Instead, the invocation of the “hot goods” provision renders the perishable crop unsalable for an indefinite amount of time, he said.
“The value of the goods has been converted to zero,” Avakian said. “That huge imbalance of power creates a constitutional due process problem.”
A top DOL official refused to discuss the details of the Oregon cases, citing ongoing litigation, but he was unapologetic about the agency’s actions.
The hot goods provision is “an important tool we use carefully and appropriately,” said David Weil, administrator of the agency’s Wage and Hour Division.
Invoking the hot goods provision is meant to prohibit unlawfully produced goods from polluting interstate trade, which benefits workers and employers who follow the rules, he said.
“The statute does not exclude any sector based on perishability,” Weil said.
Even so, DOL officials seek to resolve such cases quickly precisely due to the product’s short shelf life, he said. “That’s why our investigators move with alacrity, because they’re aware it’s perishable.”
Weil said he disagreed with the committee members’ characterization of how DOL uses its “hot goods” authority, saying the agency acted responsibly.
“I wouldn’t call it threatening employers or farmers,” he said.
The agency simply asks the grower to voluntarily restrain shipment of the crop until the matter is resolved, Weil said.
For the DOL to actually block shipment under the hot goods provision, the agency would have to obtain a court order, he said.
“The investigator doesn’t have the right to seize the goods,” Weil said.
When asked about the requirement that farmers forego challenging DOL’s findings in court, Weil responded that such waivers are common in settlement deals to ensure all parties respect the agreement.
As for the possibility of placing funds in escrow until the dispute is resolved — which the Oregon growers weren’t allowed to do — Weil said the agency considers that option when it encounters “good faith cooperation” from the employer.
That response sparked a sharp rebuke from Schrader, who said the farmers in Oregon did cooperate with the agency’s investigation.
“You keep digging a bigger hole for the Department of Labor with your testimony, sir,” he said.