FairWarining Investigates

Heat Rising Over ‘Hot Goods’

Growers Accused of Wage Violations Fight Labor Department's Tactic of Halting Farm Shipments

Blueberry pickers at a farm in Hillsboro, Oregon. (Photo by Faith Cathcart/The Oregonian)

Blueberry pickers at a farm in Hillsboro, Ore. (Photo by Faith Cathcart/The Oregonian)

An attempted crackdown on minimum wage and child labor violations at berry farms in the Pacific Northwest has sparked a backlash that threatens one of the U.S. Labor Department’s most potent tools for enforcing protections for farm workers.

At issue is the little-known “hot goods” provision of federal wage law. It allows the government to halt shipments of goods produced in violation of employment standards. The weapon has been used mainly to combat minimum wage and overtime pay abuses by garment makers but, under President Obama, federal officials have invoked the hot goods provision against farm owners somewhat more often than earlier administrations.

Farm worker advocates have pressed the Labor Department to keep using the tactic against exploitative growers. They argue that aggressive action is needed to fight abuses that government inspectors have found for decades on U.S. farms.

(Photo by Thomas Boyd/The Oregonian)

(Photo by Thomas Boyd/The Oregonian)

Farmers and their political allies — including the powerful American Farm Bureau Federation — have lined up behind a bill in Congress to prevent authorities from using the hot goods provision to stop shipments of perishable crops like berries. They argue that hot goods never was intended to apply to farm products that can spoil quickly.  They say it puts producers in an impossible situation: Pay the penalties, even if you don’t agree with the Labor Department’s accusations, or watch your crop rot.

For their part, worker advocates worry that even if the bill does not pass the gridlocked Congress, the backlash might have a chilling effect on the agency, or that its use of the tactic could be restricted through the budget process.

Under the Obama administration, the government has used the weapon in various states, including actions against a Massachusetts sprout grower and a Hawaiian basil producer charged with violating minimum wage laws, and a wave of Labor Department inspections of Washington and Oregon farms in 2011 and 2012. The agency cited three farms in Ridgefield and Woodland, Washington in 2011 for child labor violations and collected $73,050 in back wages and penalties. This past July, the Labor Department sued three blueberry farms in southeastern Washington’s Walla Walla County, accusing them of a hot goods violation for allegedly failing to pay minimum wage and overtime to pickers and packing workers. The growers — Blue Mountain Farms LLC , Great Columbia Berry Farm LLC and Applegate Orchards LLC — have yet to file an answer. Their attorney, Tim Bernasek, said the growers will contest the methods the Labor Department’s used to determine whether violations occurred.

However, the biggest flashpoint was a 2012 crackdown on three Oregon blueberry farms that allegedly underpaid about 1,000 workers. To extract roughly $240,000 in back wages, damages and penalties, the Labor Department said it would use its hot goods authority to get a court order to halt the shipment of what the growers estimate was $5.5 million of fruit.

“Nobody was out there or anything with a calculator making sure I made the federal minimum wage.”    Yonny Castillo, a college student who started working on a farm picking blueberries alongside his parents and older siblings when he was in fourth grade. Yonny Castillo, Courtesy of Oregon Alliance of Independent Colleges and Universities.

“Nobody was out there … with a calculator making sure I made the federal minimum wage.”
— Yonny Castillo, a college student who started picking blueberries alongside his parents as a child. (Courtesy of Oregon Alliance of Independent Colleges and Universities)

“They've denied farmers ... the very due process our forefathers built our country on.”  — U.S. Rep. Kurt Schrader, D-Ore.

“They’ve denied farmers … the very due process our forefathers built our country on.”
— U.S. Rep. Kurt Schrader, D-Ore.

The three growers paid up, saying they felt they had no other choice. Instead of helping lots of workers, however, the Labor Department has provoked pushback from critics who say the agency has gone “rogue” and made unsubstantiated allegations against the berry growers.

Their cause has been taken up by lawmakers led by U.S. Rep. Kurt Schrader, D-Ore., who calls the use of the hot goods provision on farms “extortion.” In July, during a congressional subcommittee hearing in which lawmakers from both parties slammed the Labor Department’s conduct, Schrader said: “They’ve denied farmers, fellow Oregonians, the very due process our forefathers built our country on.”

Two of the Oregon blueberry growers, meanwhile, have won a court ruling that voided their settlements with the government because they were made under what the judge called “economic duress.” This month the Labor Department said in a court document that it has returned all but about one-third of the growers’ money, everything except for what already was paid to some of the workers.

In all, the Labor Department has used its hot goods authority against growers in at least 20 cases since 2010, according to a review of agency data and news releases. The actions took aim at shipments of fruits, nuts and vegetables. Since 2001, the agency says it has invoked its hot goods power more than 4,000 times overall, covering a wide range of industries.

An Entrenched Problem

The abuse of farm workers in the U.S. has been chronicled for decades — most famously in Edward R. Murrow’s 1960 documentary, “Harvest of Shame.” But agricultural workers remain some of the lowest-paid, most exploited laborers in the country — with factors like immigration status, language barriers and relative isolation from the rest of society increasing their vulnerability, advocates say.

Reaction to our story:

Los Angeles Times

Cornelio Ramirez, a 28-year-old Mexican immigrant who has picked berries in Washington State for five seasons, says he and his coworkers often aren’t paid their due. When the picking isn’t good, the workers – who are paid by the pound – don’t always make minimum wage, he said. In such cases, federal law requires the employer to pay the difference.

“You got paid for what you picked. But if you only picked $50 worth of berries in 10 hours, they didn’t make up the rest,” he said.

The situation was much the same in Oregon, said Yonny Castillo, 21, who started picking blueberries alongside his parents and older siblings at a farm near their home in Hood River when he was in fourth grade. He still sometimes returns to the fields when he is on break from his college studies. Conditions on the farm have improved recently but, when Castillo was younger, he and other workers didn’t even know what legal protection existed. “Nobody was out there or anything with a calculator making sure I made the federal minimum wage,” he said.

A 2013 court declaration by Janice Hendrix, then a Labor Department official, underscored the pervasiveness of minimum wage, child labor and other violations in agriculture. She said federal investigators find such abuses on about half of the farms they inspect.

Ramon Ramirez, who heads the farm worker advocacy group Pineros y Campesinos Unidos del Noroeste (Northwest Treeplanters and Farmworkers United) in Woodburn, Ore., says his organization sees “dozens and dozens and dozens” of cases each year involving illegally underpaid workers. “It’s a travesty,” Ramirez said. “It continues the cycle of exploitation of farm workers.”

Hot goods is one of the Labor Department’s few effective, and swift, tools to combat the problems, say worker advocates such as Catherine Ruckelshaus, general counsel of the National Employment Law Project. When it’s used, workers can get paid in days or weeks instead of slogging through drawn-out court cases, she said.

And a crackdown on one farm can send a message to the entire industry. “The tool is so powerful and, when it works the way it’s supposed to, people sit up and pay attention,” Ruckelshaus said.

The Big Hammer

The hot goods provision dates back to 1938 when Congress, at the end of the Great Depression, passed the Fair Labor Standards Act — sweeping legislation that set minimum wage, child labor and overtime laws. In urging Congress to pass the law, President Franklin D. Roosevelt said: “Goods produced under conditions which do not meet rudimentary standards of decency should be regarded as contraband and ought not to be allowed to pollute the channels of interstate trade.” The provision was intended not only to protect workers, but also to make sure that companies that exploit their employees don’t gain an advantage over law-abiding competitors. The tactic has been used to force compliance from producers of goods ranging from croissants to aloe vera to designer jeans.

But Schrader, the author of the House bill, thinks the Labor Department has been too quick to resort to its hot goods powers. “You don’t use the stick before you use the carrot,” said Schrader, a large-animal veterinarian and member of the House Agriculture Committee. His biggest campaign contributor in the current election cycle is the agriculture industry, which has given him $80,350, according to the Center for Responsive Politics.

His bill to bar use of hot goods to halt the shipment of perishable foods would not stop the government from using it in cases of goods with a longer shelf life, like processed foods and clothing. Schrader already has 10 co-sponsors and is seeking more.

Meanwhile, lawmakers are taking other steps to inhibit the use of hot goods against farmers. Earlier this year, a provision was inserted into the farm bill that requires the Labor Department to consult with the U.S. Department of Agriculture before invoking its hot goods authority on a farm.

Despite the political and legal pressure, the Labor Department defends its actions. David Weil, the head of the department’s Wage and Hour Division, said in an interview that hot goods is invoked sparingly and fairly to protect vulnerable workers. “We are going down this road in those cases where we’ve found systematic problems and significant problems and violations of our most basic laws,” Weil said.

Weil also said Schrader is wrong in arguing that the hot goods provision never was meant for perishable farm products. Even manufactured goods like clothing have a short shelf life, he says, because styles change quickly and delays can lead to breached contracts. “The courts have never made that distinction; the statute doesn’t make that distinction,” Weil said.

 “We are going down this road in those cases where we’ve found systematic problems and significant problems and violations of our most basic laws.” David Weil, head of the U.S. Labor Department’s Wage and Hour Division

“We are going down this road in those cases where we’ve found systematic problems and significant problems and violations of our most basic laws.”
— David Weil, head of the U.S. Labor Department’s Wage and Hour Division (Photo by Shawn T. Moore)

The hot goods fight has its roots in blueberry fields south of Portland, Ore. Inspectors concluded that three farms in Schrader’s district had underpaid more than 1,000 workers. The inspectors also found that an 11-year-old had picked berries on one of the farms, violating child labor law that generally sets a minimum age of 12 for farm work. Authorities determined that the operations — PanAmerican Berry Farm, B&G Ditchen farm and E&S Farm — must pay back wages, damages and penalties. At that point, the Labor Department turned to its hot goods authority, and the growers quickly settled.

Bernasek, the lawyer for the farms, had seen hot goods cases before but this one had an important distinction. In previous cases, the money farmers paid went into escrow, so that workers would be paid only if violations were proved. This time, however, the escrow option wasn’t offered, and if the farmers fought back, they feared that they would lose their harvest. “If you’re walking down a dark alley at night and someone puts a gun to your head and says, ‘Give me you wallet,” you can decide not to give them your wallet, but you’re going to get shot,” Bernasek said.

“If you’re walking down a dark alley at night and someone puts a gun to your head and says, ‘Give me you wallet,’ you can decide not to give them your wallet, but you’re going to get shot.” — Tim Bernasek, a lawyer for Oregon berry farmers.

“If you’re walking down a dark alley at night and someone puts a gun to your head and says, ‘Give me you wallet,’ you can decide not to give them your wallet, but you’re going to get shot.”
— Tim Bernasek, a lawyer for berry farmers.

Weil declined comment except to say that the agency decides whether to hold money in escrow based on the facts of each case. According to a court transcript from last December, Jeremiah Miller, a Labor Department lawyer, said the money was not put into escrow because the agency was “driving a hard bargain.”

Oregon lawmakers expressed outrage at what they saw as a draconian action. In a letter to the Labor Department, six of seven House and Senate members from Oregon voiced concern that the agency had “abandoned normal due process mechanisms.”

The farm owners questioned the government’s calculations on how much the workers were paid. Despite a requirement to keep accurate records, it was unclear how much each worker had picked and earned, since in some cases multiple workers logged their pickings on a single ticket. That could make it look like some workers were making more than they really were, when they actually were splitting their paychecks with others.

The Labor Department inspectors concluded that minimum wage violations were widespread on the Oregon farms, based partly on an assumption that a single worker could be expected to pick no more than 55.5 pounds of berries per hour.

But the farmers contend the Labor Department’s estimates are way off. One hired a retired Labor Department investigator who calculated, after observing a group of pickers, that even the slowest one brought in 112 pounds per hour.

“They’re trying to take away one of the only tools we have to get justice for farmworkers.”
— Ramon Ramirez, head of a farmworker advocacy group in Oregon (Manlio Castillo Photography/ Regence)

Casting more doubt on the agency’s calculation is the Labor Department’s struggle to find, and pay, the workers who supposedly were cheated. The agency tried to locate workers through churches, the Mexican consulate and posters. But, the agency has paid workers only about $72,000 of the nearly $219,000 it collected from the PanAmerican and Ditchen farms, according to court documents filed on Oct. 3.

Ramirez, the farmworker advocate, said the number of blueberry pickers who have come forward is low because many fear that they will be blacklisted if they collect the back pay, and won’t be able to get new jobs. Many farmworkers also move frequently, following the harvest.

In the summer of 2013, a year after signing the consent agreements with the Labor Department, two of the farms – Ditchen and PanAmerican — filed their successful motion to nullify the settlements. U.S. Magistrate Thomas Coffin wrote: “When one party must agree to a comparatively minor penalty or lose millions simply to engage in the judicial process, such heavy handed leverage is fraught with economic duress brought about by an unfair advantage.”

In August, the Labor Department’s bid to appeal the ruling was denied. The two sides will be back in court on Oct. 28 in connection with an effort by the farmers to get back the rest of the money. For its part, the Labor Department plans to try to prove the violations the farms had originally agreed not to contest.

Ramirez said he’s skeptical that recent improvement in the way berry farms treat workers will continue now that the hot goods provision is under attack. “It’s absurd,” he said. “They’re trying to take away one of the only tools we have to get justice for farm workers and to protect them.”

Print Print  
bridget

About the author

Bridget Huber is a FairWarning contributor.

Leave a comment