(Photo by Thomas Boyd/The Oregonian)

An attempted crackdown on wage and hour violations on two Oregon berry farms has ended in a retreat by the U.S. Labor Department, which dropped all charges against two growers it had accused of failing to pay the minimum wage to about 1,000 workers.

The case has brought scrutiny to one of the Labor Department’s most potent weapons—the “hot goods” provision of federal law that allows it to halt the interstate shipment of goods produced in violation of wage laws. It is often used to fight alleged wage theft in the garment industry, among others.

With an estimated $5.5 million dollars worth of highly perishable blueberries on the line, the Oregon farms–Pan American Berry Growers and B&G Ditchen LLC–were threatened with a court order during their 2012 harvest. It would have barred them from shipping their produce unless they paid back wages and penalties, and waived their right to appeal. They agreed, but said they did because they felt they had no other choice.

As FairWarning reported in October, the department’s actions provoked a backlash from farm groups and their allies who accused federal officials of bullying farmers and denying them due process.

As part of the settlement, the Labor Department will also return to the growers the nearly $219,000 it collected in back wages and penalties, plus another $60,000.

Despite praising what he called a “long-overdue” settlement, U.S. Rep. Kurt Schrader, D-Ore., is moving forward with legislation that would strip the Labor Department of its authority to use the “hot goods” tool in cases involving perishable agricultural products. Schrader will introduce a bill within a couple of weeks, a spokesman said. He sponsored a similar measure last session, which had the support of the powerful American Farm Bureau Federation and 10 co-sponsors, but never came to a vote.

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Heat Rising Over ‘Hot Goods’

The settlement was, in part, a strategic decision aimed at neutralizing efforts like Schrader’s, said a person with knowledge of the Labor Department’s thinking. Even if the bill failed to pass as a stand-alone measure, it could be attached to “must-pass” legislation, which is often how things get done in the gridlocked Congress. With Republicans now in control of both the House and Senate, the department wanted to “take the hotness out of the hot goods,” the source said.

The Labor Department had staunchly defended its use of hot goods even after a federal judge threw out the agreements the farms signed, saying they did so under “economic duress.” That would have forced the agency to prove the original charges, even though more than two years had passed and many of the workers have moved on.

With political and logistical difficulties mounting, the agency backed down. The thinking, said the source, was, “Instead of continuing to get beat up here, we’re going to have to chalk this up as a loss.’’

Tim Bernasek

“They were going to have a serious proof problem. I don’t think it was a very appetizing case for them to bring forward.”
— Tim Bernasek, a lawyer for berry farmers

“They were going to have a serious proof problem,” said Tim Bernasek, a lawyer for the farms. “I don’t think it was a very appetizing case for them to bring forward.”

In a statement, the department expressed satisfaction with the settlement but signaled no change in policy: “We will continue to respond to violations in the agriculture industry through strong enforcement, using all enforcement tools that Congress has provided to the Department.”

The settlement will surely disappoint worker advocates who have pushed the Labor Department to aggressively pursue violations of farmworkers’ rights. “This sends the wrong message to farmworkers,” said Ramon Ramirez, who heads the advocacy group Pineros y Campesinos Unidos del Noroeste (Northwest Tree Planters and Farmworkers United) in Woodburn, Ore. “It basically says that you don’t count,” he said. “It doesn’t matter if you get exploited or not.”

Dave Dillon, the executive vice president of the Oregon Farm Bureau, said he spoke with one of the blueberry growers who was happy to “have his good name back.”

He stressed that he doesn’t want to see labor laws go unenforced. “This is not about enforcement,” he said. “In this case, they really blew it and went way out of bounds. The way the department behaved should never be repeated in any industry.”

Ramon Ramirez

“The bottom line is that farmworkers are not treated with respect and dignity. Farmworkers are getting ripped off.”
— Ramon Ramirez, head of a farmworker advocacy group in Oregon (Manlio Castillo Photography/ Regence)

Neither party admitted any wrongdoing and the farms will withdraw their counterclaims against the agency.

Agribusiness groups and several Oregon state officials championed the farmers’ case, portraying the Labor Department’s action as a draconian departure from its typical enforcement methods. In most hot goods cases, the Labor Department puts the money it collects into escrow until alleged violations are proven. But in this case, the escrow option wasn’t offered and farmers had to sign a document waiving their rights to appeal to get their products back on the road. While the farmers could have fought the agency in court, they didn’t, fearing their crops would rot, Bernasek said.

The farmers and their allies also challenged the methods the government used to calculate how much workers were underpaid. The Labor Department concluded that the farms were violating wage laws by employing workers off the books who did not receive the legal minimum. Their contention was partly based on comparing the volume of berries picked with the number of workers paid by the farms. The farms maintain that the Labor Department greatly underestimated the volume of berries that average workers pick.

These claims were bolstered by the fact that the Labor Department had trouble locating the workers entitled to back pay. By last fall, the agency had distributed about $72,000 of the nearly $219,000 it had collected for workers who were supposedly underpaid.The workers who received back pay won’t have to return the money.

Ramirez, who has worked with many people employed on the two berry farms, said wage theft is part of everyday life for Oregon farmworkers. “The bottom line is farmworkers are not treated with respect and dignity. Farmworkers are getting ripped off.”