By: A. Scott Hecker
As one does, I was recently reading U.S. DOL Wage and Hour Division (“WHD”) Field Assistance Bulletin (“FAB”) 2023-3 regarding “Prohibitions against the shipment of ‘Hot Goods’ under the Child Labor Provisions of the Fair Labor Standards Act.” You may be disappointed to learn that the term “hot goods” does not appear in the FLSA, but section 212(a) of the Act provides the operative definition for this fun phrase: “any goods produced in an establishment situated in the United States in or about which within thirty days prior to the removal of such goods therefrom any oppressive child labor has been employed.”
FABs are meant to provide enforcement guidance to WHD field personnel, and this one “clarified” elements of the hot goods provisions, as well as discussed potential penalties and the availability – in certain circumstances – of a good faith defense for purchasers of hot goods. According to section 212(a), to demonstrate good faith, purchasers must show they relied “on written assurance from the producer, manufacturer, or dealer that the goods were produced in compliance with the requirements of this section, and . . . acquired such goods for value without notice of any such violation.” FAB 2023-3 indicates the good faith analysis is case-specific and requires a purchaser’s “objectively reasonable” actual knowledge or belief “that the written assurance of compliance was true, and [the purchaser] was not aware of any other child labor violations.” Purchasers cannot claim the defense if they:
- “[A]cquire goods after becoming aware of child labor violations.”
- Did “not receive actual written assurance from the producer, manufacturer, or dealer.”
- “[R]eceive written assurance of compliance after acquiring the goods.”
- Rely on “[w]ritten assurances with respect to the future production of goods,” rather than addressing goods already produced.
When WHD finds child labor violations, it “may request that the producer, manufacturer, or dealer voluntarily refrain from shipping the goods until the child labor violation has been remedied.” If these entities won’t voluntarily comply, WHD “may pursue legal action . . . and may notify other downstream parties in the supply chain of the shipment restrictions.” WHD can also assess civil money penalties and consider requiring “enhanced compliance terms” before lifting its embargo on hot goods.
All very interesting and important information. But the section of the FAB that struck me most, and that illustrates why we need to read “the fine print” in sub-regulatory guidance, advised when “a company sends [a 17-year-old] minor to perform landscaping work at a clothing company’s factory where goods are produced and eventually shipped out of state,” and “the minor uses a power-driven saw to cut wood, which is a hazardous occupation under 29 C.F.R. 570.55, and therefore constitutes ‘oppressive child labor,’” then,
[e]ven if the minor is not themself engaged in commerce or the production of goods for commerce and is not employed by an enterprise that is engaged in commerce or the production of goods for commerce, section 212(a) may still apply because oppressive child labor occurred in or about the establishment where the goods were produced.
Put another way, “even if the minor is employed by the landscaping company, not the clothing company, and the landscaping company is not engaged in commerce or the production of goods for commerce, section 212(a) may apply,” so “[a]ny goods produced at the clothing factory that are removed from the establishment within 30 days of the minor using the power-driven saw, or any other child labor violation, are considered ‘hot goods’ and are thereafter barred from being shipped in commerce.”
Having podcasted and presented on the importance of child labor compliance, and how it might be achieved, please don’t read this as suggesting my kids should be able to work anywhere with a power-driven saw (not sure I should be allowed), but to stay on the right side of the law, employers must remain cognizant of how agencies view their enforcement authority, including – especially? – when they suggest a company, which doesn’t employ the minor and may well appear fully compliant with child labor laws, could nonetheless run afoul of statutory requirements.
Perhaps this attention to detail is even more important in our current environment where state and federal child labor laws aren’t always aligned. Indeed, responding to a request from Iowa State Senator Nate Boulton, Solicitor of Labor Seema Nanda and Principal WHD Deputy Administrator Jessica Looman recently wrote “provisions of Iowa’s child labor law . . . appear to be inconsistent with federal child labor law,” and “employers covered by the FLSA who only follow a less restrictive Iowa law will be in violation of federal law.”
For more on this or any related topic, please do not hesitate to connect with the author or your favorite member of Seyfarth’s Wage and Hour Practice Group.