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Tuesday, March 18, 2014

Labor's Blueberry Police -- A case study in the Obama Administration's enforcement method -- Review & Outlook, The Wall Street Journal

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.
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