In August 2012, the U.S. Department of Labor invoked its “hot goods” authority and seized blueberry shipments from three Oregon farmers whose labor contractors paid 1,300 migrant workers sub-minimum wages. Worried the fruit would spoil, the growers agreed to pay $240,000 in back wages and fines.
As part of the deal, they agreed not to appeal. The workers got paid, the farmers got their blueberries back and that should have been the end of the story. But instead of going after their contractors for the money, the growers, backed by the Oregon Farm Bureau, launched an aggressive campaign accusing the DOL of extortion.
The BlueberryGate backlash has been mighty: The recently-signed federal Farm Bill requires DOL to “consult” with the Department of Agriculture before invoking hot goods. Oregon lawmakers went a giant step further, introducing a bill in Congress to take away DOL’s use of hot-goods seizures for any perishable crops. Forbes is using the case to attack the nation’s bedrock labor protection: the Fair Labor Standards Act. The Wall Street Journal recently jumped into the fray, using the case to further arguments against an “overbearing regulatory state.”
On the contrary, the case shows the need for regulation, for without the DOL’s action, the pickers would have had little recourse. The industry is predominantly made up of migrant workers from Mexico, who toil in the fields for as little as 30 cents per pound of picked berries. The Oregon pickers were immigrants, mostly from Mexico, including migrant workers who came from California to work in the fields, and seasonal workers living in Oregon. It’s the rare instance that such workers can stand up for their rights. (In August, blueberry pickers in Washington walked off their jobs to protest low wages, harassment and squalid living conditions, but this is the exception to the rule.)
In the Oregon case, the blueberry pickers were paid what is called a “piece rate,” and were paid by the pound. As agricultural workers, they are not eligible for overtime. The piece rate is required by law to equal minimum wage, but DOL calculated that no one worker could possibly have picked the amount of blueberries the growers put on each ticket, concluding that they must have been including more than one picker on each one.
The Wall Street Journal editorial paints a picture of the growers — not the pickers — being taken advantage of, arguing that the DOL had no basis for deciding its blueberries were picked by workers earning less than minimum wage. The editorial also makes a far-fetched claim that the hot-goods law was intended only to police manufacturers of “T-shirts sewn by child laborers.” The argument could not be more off-base. Hot-goods seizure has been a DOL tool for more than 60 years, and has been used in agriculture, garment and other sectors where there are goods produced in substandard conditions — not just for T-shirts sewn in sweatshops. In fact, DOL has listed agriculture as one of its targeted industries for decades, but compliance in this sector and others remains elusive, making hot-goods holds an important remedy.
Moreover, only a court can issue a hot-goods order, and it may only be issued if a judge finds it highly likely that the law has been violated. Employers can contest a proposed order with records of hours and wages paid, for instance. DOL’s briefs in the case show that officials notified the blueberry growers they would seek a hot-goods hold, presenting them with evidence of violations. The growers negotiated with DOL for a month and entered into a consent agreement to pay, which the court approved without objections from the companies. Just under a year later, the growers went back to the court with the same attorney and tried to overturn their bargained-for agreement with no reason given for the delay.
Astonishingly, a federal magistrate judge in Oregon sided with the growers, ruling that the DOL’s use of the hot goods power in theblueberry cases was improperly invoked. Now, it’s the DOL’s turn to make its case. Earlier this month, it filed objections to the judge’s ruling, arguing that the blueberries were unlawfully picked hot goods and that the magistrate took “unsupported allegations at face value.”
How the case plays out has implications far beyond Oregon. Agricultural jobs are among the lowest-paid occupations in the country, and industry operators regularly show up on the list of the worst violators of minimum wage law. The Fair Labor Standards Act of 1938 gave the DOL the power to use a hot-goods hold to secure payment from employers who cheat workers out of wages. The law is intended to make sure the channels of interstate commerce aren’t polluted with illegally-produced goods that unfairly compete with those made by law-abiding employers.
The ability to seize hot goods is one very powerful tool that an overstretched DOL has to combat wage theft, which is rampant, especially in low-paid occupations like migrant farming, garment manufacturing, retail warehousing and the service sector. Changes in the structure of the economy and in the complexity of employment relationships, as well as the decline in union membership, are central factors driving lower wages and poor working conditions.
In subcontracted jobs like those of the blueberry pickers, goods are often produced in violation of the minimum wage law, and the workers are left with little recourse against fly-by-night labor contractors. Subcontracted agricultural workers earn as much as 50 percent less than workers hired directly by a farmer. Because the hot-goods law places potential responsibility on the end-users or possessors of the goods, these entities are more likely to carefully consider the contractors with whom they do business.
A look at the garment industry shows that hot goods seizures work. Through aggressive enforcement and use of the hot goods provisions in the garment industry in the late 1990s and early 2000s, the DOL changed behavior among small contractors operating at the bottom of the industry by reaching comprehensive agreements with larger manufacturers.
We should be seeing more hot goods seizures, not less, and without the frenetic backlash the Oregon case has generated. Otherwise, scofflaw employers will continue to flout basic fair pay laws and undercut responsible employers by contracting with undercapitalized labor brokers. That’s a sour deal for workers, law-abiding employers and our economy.
