Seyfarth Synopsis: Child labor laws remain fertile ground for government enforcement as evaluate key issues for 2024. Late last year, the Wage Hour Division released guidance for new processes to assess greater penalties against companies who violated child labor laws. Companies should take note of the increased financial risks and overall teamwork between the government agencies to crack down on child labor violations.
On November 28, 2023, the Department of Labor’s Wage and Hour Division (WHD) issued a Field Assistance Bulletin (“FAB”) explaining changes to its process to assess Civil Money Penalties (CMPs) for child labor law violations. The WHD’s focus on child labor law comes as no surprise, as in early 2023, the Department of Labor (DOL) announced its strategic initiative with the Department of Health and Human Services (“HHS”) to crack down on child labor law violations, citing an 88% increase in the number of children employed in violation of the law over the last five years. Employers with minor employees now face greater economic liability when WHD concludes they have committed child labor law violations.
Most commonly, WHD uncovers alleged violations and assesses attendant penalties through investigations, which may be initiated based on employee complaints or under WHD initiatives targeting particular business sectors. Given the priority DOL places on child labor law violations, investigations increased in both retail and the fast food industry last year – a trend that will most likely continue, at least through 2024. One of the first questions every investigator must ask is whether the company employs minors. If the company does employ minors, the investigator will assess compliance with federal and state child labor laws.
Prior to the CMP FAB, WHD assessed penalties on a per child basis – meaning that once a violation for a particular minor was found, the DOL stopped “counting” how many violations occurred and simply issued a flat fee penalty for that child. WHD totaled the number of minors, and the amount could be increased or decreased based on a factors including company size and/or repeat violations.
Now, the DOL will issue penalties per violation, instead of per minor. Imagine three violations were found for one employed minor. Pre-November 2023, one penalty would be assessed. But the new FAB allows WHD to issue an employer three violations. Consequently, penalty assessments will increase drastically when there are multiple minors.
DOL explained additional premiums it will assess based on willfulness and type of injury. The chart indicates the total penalty can go up (or down) based on a variety of factors:
- Repeated Violations;
- Willfulness/ Knowledge;
- Number of Minors Employed;
- Age of Minors;
- Type of Hazardous Work;
- Resultant Injuries;
- Duration/ Months of Illegal Employment; and
- Total Hours Worked.
After assessing the above factors, the DOL will look at a company’s earnings to further adjust the total penalty. Often, companies and their attorneys are in the dark as to the exact penalty structure for violations, so the transparency DOL provides in its FAB is unique, and although we are seeing concrete percentages, there may also be subjective factors that come into play – making it important to seek legal counsel when facing a child labor investigation.
We’ve previously opined about penalties assessed on “hot goods,” i.e., materials manufactured in factories with oppressive child labor that then enter the stream of commerce. Note, hot goods exposure extends beyond the producer of the goods, with the manufacturer or dealer also subject to enforcement activity from WHD. With its new FAB, DOL expands and increases penalties associated with nonserious injuries, and starting November 28, 2023, increased penalties when violations are found.
Recent WHD enforcement has led to penalties in the millions of dollars, along with further economic impacts resulting from halting the flow of hot goods into commerce. Recently, through a consent judgment, the DOL secured a multimillion dollar penalty against a meat packing company for overtime and child labor law violations. DOL determined that minors were working illegal overtime hours and hazardously involved in meat carving. DOL halted the flow of subject “hot goods” into commerce – illustrating potential financial impacts for child labor violations beyond the possibility of significant monetary penalties.
Beyond DOL’s interagency initiative with HHS, employers should expect continued collaboration between DOL’s sister enforcement agencies, WHD and the Occupational Safety and Health Administration. While WHD is charged with the enforcement of child labor laws, OSHA’s safety and health regulations apply to basically all employers. So, where OSHA finds minors working, it can refer any perceived child labor issues to WHD; similarly, if WHD identifies broader workplace safety and health issues during child labor investigations, companies can expect the Division will let its OSHA colleagues know. We recently saw an example of interagency collaboration involved in the death of a minor in a sawmill accident. Both agencies investigated, based on the employer’s failure to provide adequate training to adults and minors, and between the two investigations, the company received over a million dollars in fines and penalties. Similarly, OSHA recently issued violations and penalties following the death of teenage worker in a poultry plant, and WHD has an open investigation at the facility.
Given the collaborative climate among agencies, employers can expect increases in both child labor law enforcement and penalty exposure through – at least – the balance of the year. Discussing compliance with competent counsel can help businesses protect their workers and head off potential issues before they arise.
For more from Seyfarth on child labor issues, listen to relevant Firm podcasts here and here.
