Ag advocates argue 'hot goods' tactics resemble extortion, subvert due process
By MITCH LIES
and MATEUSZ PERKOWSKI
The U.S. Department of Labor is blocking the shipment of perishable fruit from farmers it accuses of labor violations, threatening to hold the goods until the producer pays a fine and signs a consent agreement admitting guilt.
Producers who contest the allegations must schedule an administrative hearing and risk losing their crop in the meantime.
Labor experts say it's a common department tactic that raises questions about whether farmers' right to due process is being subverted.
The Oregon Farm Bureau Federation says the department appears to be focusing its regulatory resources on Northwest farms.
It says at least seven Oregon farms have been inspected within the last 10 days, subjecting operations suspected of labor violations to "hot goods" orders. Three Washington farms were subjected to hot goods orders last year.
Hot goods orders are mechanisms used by the department's Wage and Hour Division to stop goods that it alleges have been produced in violation of the Fair Labor Standards Act from entering retail and processing chains.
At least two Oregon farms, both blueberry farms, have been subject to the order in the past 10 days, the Farm Bureau said, despite the fact the department has yet to prove a violation.
"Before the due process has gone forward, they are at a place where their crop is at complete risk of being lost," said Katie Fast, government affairs director for the Oregon Farm Bureau.
Efforts to reach Jeffrey Genkos, director of the U.S. Department of Labor's Portland District Office, were unsuccessful. Department officials in Washington, D.C., and in Washington state did not return calls seeking comment.
Dave Dillon, executive vice president of the Oregon Farm Bureau, referred to the tactic as "an administrative overreach."
The farms subjected to the order have been asked to place funds in an escrow account, Dillon said, and asked to sign a consent judgment before the department releases its hold on the goods.
"Typically in consent judgments, if they are signed, the grower is admitting guilt," said Gail Greenman, national affairs specialist for OFBF.
With crops at risk of spoiling, Greenman said, growers -- even innocent ones -- may be inclined to sign.
Fast said the Farm Bureau supports enforcing wage-and-hour, child-labor and other provisions of the Fair Labor Standards Act. But, she said, employing the hot goods order on a farm before a farm can challenge the order is tantamount to extortion.
The Oregon producers declined to come forward because they are still in negotiations with the department.
'We had to pay'
When the federal government accused him of child labor and minimum wage violations in late July, Marvin Van Mersbergen said he wasn't facing a fair fight.
The U.S. Department of Labor threatened to prevent his PTM Berry Farms in Lynden, Wash., from shipping its crops -- unless the company agreed to settle the case with the department, he said.
Though Van Mersbergen said he didn't think the charges were valid, he decided to sign a consent decree to get back to work rather than challenge the accusations.
"We had to pay the fine to be able to ship the fruit," he said.
As part of the deal, Van Mersbergen agreed to pay a $32,000 penalty "relating to oppressive child labor" to the Labor Department. A labor contractor charged in the case paid the same penalty.
Other farmers who have heard about the case are upset because they're afraid the Labor Department may put them in a similar situation, Van Mersbergen said.
Farm labor experts say growers have a right to be worried.
The agency increasingly appears to be invoking a hot goods provision of federal labor law under which farmers can effectively be stopped from selling their perishable crops, experts say.
The tactic raises serious questions about respect for due process rights, because farmers are pressured to accept settlement or face losing their crops, said Tim Bernasek, an attorney who has represented growers in hot goods cases.
"They've got a whole year's worth of investment at stake," he said.
Companies confronted with the hot goods provision can request that the Labor Department first obtain an injunction from a federal court prohibiting the shipment of their crops, Bernasek said.
However, this approach generally isn't realistic for producers of perishable goods, especially as the agency can still threaten their downstream clients with legal action if they sell the crops, he said.
Farmers don't want to put buyers at risk in this way, so they tend to settle with the Labor Department rather than jeopardize business relationships, Bernasek said.
"The threat is enough to shut it down," he said.
In recent years, congressional aides have warned the National Council of Agricultural Employers that the department planned to employ the hot goods provision against farmers, said Frank Gasperini, the group's executive director.
"They are focusing their resources there," he said. "It had not really been used in agriculture in the past."
The hot goods provision has usually been invoked to stop importation of products made from endangered species or that have relied on overseas child labor or forced labor, Gasperini said.
Unlike companies that deal in nonperishable goods, growers of fruits and vegetables face more time pressure to resolve the issue, he said. "It's holding your farm hostage when this happens."
If the Labor Department's allegations are proven false, the agency doesn't have any responsibility to reimburse farmers for lost crops, Gasperini said.
"It really is a David versus Goliath situation," he said. "It seems to be a deprivation of due process."
The agency's reliance on the hot goods provision is especially troubling because the Labor Department can seek damages from farmers for alleged labor violations through other procedures, Bernasek said.
Instead, the agency prefers to use a method that effectively precludes the opportunity for farmers to fight the charges, he said.
Bernasek said he knows of several farmers investigated by the Labor Department in Oregon this year, though he couldn't go into specifics.
Last year, three berry farms in Washington agreed to pay the Labor Department penalties ranging from about $16,000 to $32,000 after the agency invoked the hot goods provision.
"If people don't stand up to this, it's going to happen more," said Dan Fazio, director of the Washington Farm Labor Association. "It almost seems like a government out of control."
Fazio said the Labor Department likely focused more on farm violations because the agency wanted to buttress its case for stricter child-labor rules last year.
Those regulations were pulled earlier this year due to public opposition, but the agency has still continued to rely on the hot goods provision, he said. "Once the regulators get a whiff of a new tool, it's in their arsenal."
Farmers who agree to consent decrees may be able to later challenge them as having been signed under duress, but this isn't a realistic option due to the cost involved, Fazio said.
While it may be hard for farmers to resist complying with the agency's request to settle, they should still report their concerns to elected officials, said Scott Dilley, associate director of government affairs for the Washington Farm Bureau.
"Those are the same folks who can exert some pressure on DOL," he said.