DOL Issues Guidance on Hot Goods Provision of FLSA Child Labor Laws
HIGHLIGHTS
The goods covered by the hot goods provision can include manufactured goods, agricultural goods, or any other product sold or shipped in interstate commerce.
The FLSA authorizes the DOL to request a court order to prevent the shipment of hot goods.
Oppressive child labor may include the employment of 16- or 17-year- olds in hazardous nonagricultural occupations, 14- or 15-year-olds in hazardous agricultural occupations, 14- or 15-year-olds in prohibited occupations, 14- or 15-year-olds during restricted hours and children under the legal age of employment.
On Aug. 31, 2023, the U.S. Department of Labor (DOL) published Field Assistant Bulletin (FAB) 2023-03 to clarify when and how agency officers should evoke the “hot goods” provision of the Fair Labor Standards Act (FLSA) child labor laws.
While FABs are not necessarily legally binding, they offer insight into how the DOL interprets labor and employment laws and how agency officers will analyze workplace conditions and circumstances to enforce compliance.
Employers with employees under the age of 18 should review how FAB 2023-03 may impact their operations.
The Hot Goods Provision
Child labor laws under the FLSA exist, in part, to prevent employees under 18 from working in occupations that jeopardize their “health, well-being or educational opportunities.”
As part of its enforcement authority, the DOL can prohibit businesses from shipping hot goods, which are goods that were produced “in an establishment in or about which oppressive child labor occurred.” If oppressive child labor occurs, the goods produced in or about that establishment are considered “hot,” regardless of whether the children in question worked directly on the goods.
Hot goods are barred from interstate commerce in the FLSA. The DOL can request that businesses voluntarily refrain from shipping the goods until the child labor violation is remedied.
However, the DOL also has the authority to seek injunctions or restraining orders against employers that do not voluntarily withhold goods from shipment. The prohibition against the shipment of hot goods also applies to downstream shipments of these goods if the goods were removed from the producing establishment in the 30 days following a child labor violation.
In addition, the DOL may also impose civil penalties and other remedies to encourage compliance before lifting objections to the shipment of goods.
Child labor laws do not require that minors employed in oppressive child labor are themselves engaged in commerce or the production of goods for commerce or are employed by an enterprise engaged in commerce or the production of goods for commerce. Unlike other provisions of the FLSA, the hot goods provision does not require that the minor be covered by the law on an individual or enterprise basis.
FAB 2023-03 Guidance
FLSA Section 212(a) states: “No producer, manufacturer, or dealer shall ship or deliver for shipment in commerce any goods produced in an establishment situated in the United States in or about which within 30 days prior to the removal of such goods therefrom any oppressive child labor has been employed.”
To help enforcement officers in their efforts, FAB 2023-03 provides agency interpretations for key terms of the law. Notable definitions include those of “goods,” “in or about an establishment,” and “oppressive child labor.”
What Are Goods?
“Goods” is defined as “wares, products, commodities, merchandise, or articles or subjects of commerce of any character, or any part or ingredient thereof.”
This includes such items as food, clothing, machinery and printed materials, as well as news, ideas, intelligence and other intangibles. This also includes any raw materials, parts, or ingredients that will be used, processed or converted into a new product. Where a hot good has been incorporated as a component of a new product, the entire new product will also become a hot good.
For example, buttons produced at a factory in or about which child labor violations occurred are hot goods. If the buttons are removed from the factory within 30 days after the last child labor violation occurred and are subsequently shipped to a clothing producer who sews the buttons onto shirts, then the shirts become hot goods.
Additionally, the commingling of hot goods with other goods will make all the goods hot.
For example, if T-shirts that were produced at a factory where child labor violations occurred within 30 days of removal are stored at a third-party distributor’s warehouse and mixed with T-shirts from other factories, then all the T-shirts will be considered hot goods. In order to ship the T-shirts that are not hot, the distributor would need to be able to clearly separate the hot goods T-shirts from the other t-shirts.
What Is “In or About an Establishment”?
Section 212(a) applies when a minor is engaged in oppressive child labor “in or about” an establishment. A minor is employed “in” an establishment when they perform at least some of their occupational duties on the premises, regardless of whether they are employed by the actual owner or operator of the establishment. This does not include situations where the minor only visits an establishment for short periods of time or for the sole purpose of picking up or delivering messages or small packages and is not employed by the owner or operator of the establishment.
A minor is employed “about” an establishment if they perform their occupational duties close in proximity to the establishment, and the minor’s occupation is directly related to the activities carried on in the producing establishment. For example, a minor that regularly loads products onto a truck outside the factory where the products were produced may be considered employed “in or about” such establishment, regardless of whether they enter the factory itself.
The term “establishment” refers to a physical place where goods are produced. An establishment may extend over an area of several square miles, such as a farm or logging operation, or may be confined to a few square feet, such as an individual workshop. Furthermore, an establishment need not have a permanently fixed location. For example, a boat that is used to catch fish may be considered an establishment for purposes of Section 212(a).
What Is Oppressive Child Labor?
Section 212(a) prohibits the shipment of goods in commerce that were produced in establishments in or about which oppressive child labor occurred. The FLSA defines “oppressive child labor” broadly. Different rules apply to agricultural and nonagricultural employment.
In nonagricultural employment, 16- and 17-year-olds are not permitted to perform work prohibited by hazardous occupations orders issued by the Wage and Hour Division. However, minors in this age group are not restricted in the number of hours or times of day they can work.
Fourteen- and 15-year-olds employed in nonagricultural employment are only permitted to perform work specifically permitted by Wage and Hour regulations and only at certain times of the day and for limited hours per day and per week.
Children under the age of 14 are generally not permitted to work in nonagricultural employment except under limited circumstances, such as when they are employed by a parent or a person standing in place of a parent or when performing work such as acting or delivering newspapers to consumers.
Employers should review FAB 2023-03 for a description of agricultural oppressive child labor.
This Legal Update is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2023 Zywave, Inc. All rights reserved.