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Policy: Labor

Labor Department tells Arkansas businesswoman she can't have volunteers

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Beltway Confidential,Opinion,Sean Higgins,Labor,Arkansas,Cause of Action

Ladies and gentlemen, be careful who you volunteer for — you could be doing them a lot more harm than good. The federal government sometimes takes dim view of such generosity.

Just ask Rhea Lana Riner. She owns a small Arkansas-based business that organizes consignment sales. Since August, the Labor Department has been threatening her with stiff financial penalties, saying her business practices are illegal.

It has even been contacting donors to her events and encouraging them to instigate legal action against her.

Why? Well, the department says Riner cannot legally allow the people who provide items for sale to also volunteer at the events — even if they want to. That violates of the Fair Labor Standards Act. Only paid employees can do that.

Riner is fighting back, and on Monday filed a legal complaint against the department with the U.S. District Court for the District of Columbia. The legal nonprofit group Cause of Action is representing her.

Rhea Lana, Inc., hosts what are essentially big semiannual yard sales. People who donate clothing or other items get 70 percent of the profits from the sales of their items as well as first crack at the other merchandise.

The donors also often volunteer at the events, doing things like hanging clothes or working the cash register. This helps to ensure that their items get sold. That’s also what got Riner in trouble with the feds.

In Aug. 26 letter, the DOL’s Wage and Hour Division said the business was in violation of the FLSA because she wasn’t paying the volunteers. The department said no penalty was being assessed at the time, but that any further "repeated or willful violations" of their ruling would result in fines "not to exceed $1,100 for each such violation."

The department ominously added: "Letters have been sent to the consignors/volunteers informing of their private right under the FLSA to bring an independent suit to recover any back wages due."

Rhea Lana's did agree to pay more than $6,300 in back wages to 39 people Riner concurred were not volunteers but independent contractors, but rejected the department's assertion the others were employees.

The department explained its thinking in the case an Aug. 30 letter to Rep. Tim Griffin, R-Ark.: It only allows volunteerism for “religious, charitable, civic, humanitarian or similar non-profit organizations.” Riner’s for-profit business did not qualify.

The letter to Griffin bluntly stated that it didn't matter what the volunteers themselves thought. It cited a 1945 Supreme Court ruling that found that the FLSA must "be applied even to those who would decline its protections." The court argued in that case that if exceptions were allowed for volunteers then "employers might be able to use superior bargaining power to coerce employees to make such assertions."

Cause of Action lawyer Reed Rubinstein called the department’s interpretation absurd in Riner’s case. He argued the Supreme Court’s ruling was meant to apply to people who were already working for the employer and therefore could be exploited with the threat of firing.

That was not the case with Riner’s consignors. They were not required to volunteer, controlled their own schedules when they did and couldn’t be fired or otherwise disciplined since they didn’t work for her to begin with.

"What power does Rhea Lana have over these people?" Rubinstein asked.

It is not clear if the volunteers themselves believe they have been exploited. According to Cause of Action, no complaints had been made by donors prior to the government’s action. Nor were they aware of any of anyone following up on the department’s invitation to take legal action.

I asked the Labor Department if they could cite any examples volunteers claiming to be exploited. A spokesman declined to answer the Washington Examiner’s inquiries on the matter.

The spokesman said only: "The U.S. Department of Labor is not aware of any complaint filed by Rhea Lana, Inc. against the department. However, we will review any complaints filed against us, and will respond accordingly."

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