Washington, D.C. – Cause of Action Institute (“CoA Institute”) today filed its opening brief in the Court of Appeals for the D.C. Circuit challenging a district court ruling issued last September that wrongly found that consignors who also volunteer at children’s clothing consignment events must be considered employees under the Fair Labor Standards Act (“FLSA”).
In 2013, the U.S. Department of Labor (“DOL”) sent our client, Rhea Lana Riner, a letter claiming that her company was in violation of the FLSA regarding minimum wages and overtime pay. The government threatened steep fines if Rhea Lana did not comply.
CoA Institute Counsel Josh Schopf: “The FLSA is a decades-old law intended to protect vulnerable workers from exploitation. That is clearly not happening at Rhea Lana’s events, and the district court acknowledged that fact. Yet the court sided with the government anyway, attacking a business model that provides hardworking families and communities with affordable children’s clothing and goods. We prevailed once on appeal, and we hope to do so again.”
The brief states:
These are not unprotected workers lacking in bargaining power or workers toiling away for long hours in sub-standard conditions. Common sense dictates that this activity does not require remediation of the type contemplated by the FLSA…
The District Court even acknowledged that Rhea Lana’s did not exploit any of the consignor/volunteers, yet somehow the court still accepted the DOL’s claims that the agency’s determination was consistent with the purposes of the FLSA.
The brief urges the Court to reverse the judgment of the lower court and declare that consignor/volunteers at these events are not Rhea Lana’s employees.
Case background:
Rhea Lana founded her clothing consignment business in her living room more than two decades ago. Since the company’s humble beginnings, Rhea Lana, Inc. has expanded as a franchise with dozens of locations across 21 states.
Rhea Lana’s semi-annual, consignment events allow families to consign their used children’s items and receive 70% of the proceeds. The events also allow families to save money by giving them the opportunity to purchase discounted goods. At the end of the event, consignors can collect their unsold goods or elect to donate them to charity. This model allows Rhea Lana’s customers to provide high quality items for their children at a price they can afford.
Yet in 2013, the U.S. Department of Labor conducted an audit, and sent Rhea Lana an enforcement letter claiming that her company was in violation of the FLSA regarding minimum wages and overtime pay.
With the help of CoA Institute, Rhea Lana fought back. Her company’s complaint was initially dismissed in 2014 for lack of a reviewable agency action. On appeal, however, the Court of Appeals held that the government’s letter to Rhea Lana was subject to judicial review. In September 2017, the district court ruled in favor of the government on the merits. CoA Institute continues to represent Rhea Lana in appealing the district court’s decision to the D.C. Circuit.
Watch a video about Rhea Lana’s story here.
For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org.
