DATE: August 18, 1994
CASE NO. 93-CLA-6
In the Matter of
ROBERT REICH, SECRETARY OF
LABOR, UNITED STATES DEPARTMENT
OF LABOR
Plaintiff
v.
VEADA INDUSTRIES, INC., A
CORPORATION, AND ROBERT STEURY,
INDIVIDUALLY AND AS PRESIDENT OF
VEADA INDUSTRIES
Respondents
APPEARANCES:
B. DOUGLAS HAYES, Esquire
For the Respondent
C. H. STUART CHARLSON, Esquire
For the Plaintiff
BEFORE: ROBERT L. HILLYARD
Administrative Law Judge
DECISION AND ORDER
This proceeding arises under the Fair Labor Standards Act, as
amended, 29 U.S.C. §201 et seq. (the Act) and the
regulations promulgated thereunder. This case was referred to the
Office of Administrative Law Judges by the Solicitor, United States
Department of Labor, for a formal hearing.
A formal hearing in this case was held in South Bend, Indiana,
on November 3, 1993. Each of the parties was afforded full
opportunity to present evidence and argument at the hearing as
provided in the Act and the regulations issued thereunder which are
[PAGE 2]
found in Title 29 of the Code of Federal Regulations. Regulation
section numbers mentioned in this Decision and Order refer to the
sections of that title.
The findings and conclusions which follow are based upon a
careful analysis of the entire record in light of the arguments of
the parties, applicable statutory provisions, regulations and
pertinent case law.
I. STATEMENT OF THE CASE
On March 12, 1992, the Wage and Hour Division (Wage and Hour)
of the United States Department of Labor charged the Respondent,
Veada Industries, with five violations of Hazardous Order No. 5 of
the Act. On March 26, 1992, Wage and Hour assessed a $5,600.00
fine against the Respondent for those violations. On April 8,
1992, Veada Industries issued an exception letter to Wage and Hour
requesting rescission of the notice of violation and penalty. The
matter was referred to the Chief Administrative Law Judge of the
United States Department of Labor on October 14, 1992, and a formal
hearing was held on November 3, 1993.
II. STIPULATIONS
The parties agreed to the following stipulations:
1. Veada Industries, Inc. (hereinafter "Veada") is an Indiana
corporation with a place of business at 19240 Tarmon Road, New
Paris, Indiana.
2. Robert Steury is, and all times relevant to this matter
was, a stockholder and the president of Veada.
3. Robert Steury, an individual, at all times relevant to
this matter, acted directly and indirectly in the interest of the
corporate defendant, Veada, in relation to its employees.
4. At all times relevant to this matter, Veada was engaged in
the manufacture of seating and canvas products for the boat and van
conversion industries.
5. The relevant investigative period was February 24, 1990 to
February 24, 1992 (hereinafter "investigative period").
6. During the investigative period, Veada was an enterprise
within the meaning of section 3(r)(1) of the Fair Labor Standards
Act of 1938, as amended (29 U.S.C. 201, etseq.),
hereinafter referred to as the Act, in that it was engaged in
related activi
[PAGE 3]
ties, performed through unified operation or common control, for a
common business purpose.
7. During the investigative period, Veada had at least two
employees engaged in the production of goods for commerce or
engaged in handling, selling or otherwise working on goods or
materials that had been moved in or produced for commerce by any
person, and had a annual gross volume of sales made or business
done of not less than $500,000. Veada is an enterprise engaged in
commerce or in the production of goods for commerce within the
meaning of section 3(s)(1) of the Act.
8. At all times relevant to this matter, respondents owned
and utilized the Senco Model J light duty stapler in the course of
their business.
9. The Senco Model J light duty stapler is a portable air-
powered stapler. At all times relevant to this matter, the air
pressure used to operate the stapler was approximately ninety-six
(96) Pounds per square inch.
10. During the period from July 15, 1991 to February 24,
1992, Veada employed Paul E. Borkholder, who was born on April 27,
1974. Paul E. Borkholder was 17 years of age during the aforesaid
period of employment. Mr. Borkholder's job duties included
operating a Senco Model J light duty stapler on a regular basis.
11. During the period from March 20, 1991 to February 24,
1992, Veada employed Harvey Hershberger, who was born on October
24, 1974. Harvey Hershberger was 16 and 17 years of age during the
aforesaid period of employment. Mr. Herschberger's job duties
included operating a Senco Model J light duty stapler on a regular
basis.
12. During the period from February 24, 1990 to April 19,
1991, Veada employed Mark Hershberger, who was born on April 20,
1973. Mark Hershberger was 16 and 17 years of age during the
aforesaid period of employment. Mr. Hershberger's job duties
included operating a Senco Model J light duty stapler.
13. During the period from October 14, 1991, to February 24,
1992, Veada employed Clarence Miller, who was born on December 12,
1974. Clarence Miller was 16 and 17 years of age during the
aforesaid period of employment. Mr. Miller's job duties included
operating a Senco Model J light duty stapler.
14. During the period from August 26, 1991 to February 24,
[PAGE 4]
1992, Veada employed Eric Schmucker, who was born on June 3, 1975.
Eric Schmucker was 16 years of age during the aforesaid period of
employment. Mr. Schmucker's job duties included operating a Senco
Model J light duty stapler.
15. During the investigative period, Veada's manufacturing
facility consists of six (6) departments: Department 262 - Canvas;
Department 265 - Van; Department 2601 - Boat Sewing; Department
2602 - Boat Trimming; Department 2603 - Woodshop; and Department
2604 - Boat Trimming.
16. During the investigative period, the staple sizes used by
the minors at Veada, identified in Form WH-103, in the Senco Model
J stapler were one-quarter inch (1/4") and three-eighth inch (3/8")
in depth and five-sixteenth (5/16") in width.
17. During the investigation period, the nature of the work
being performed by the minors identified in Form WH-103, included
upholstering pre-assembled boat seats (wooden and plastic), boat
benches, bow arms, steering consoles, refreshment centers, and
gunnel pads. The jobs involved covering the pre-assembled units,
mentioned above, with pre-sewn vinyl covers and attaching them
securely with staples.
18. The Senco Model J stapler was used to attach vinyl,
fabric, foam, plastic film and plastic molding to the pre-assembled
units (identified in Stipulation 18). The thicknesses of these
materials are: vinyl - one-thirty-second inch (1/32"); fabric -
one-sixteenth inch (1/16"); foam - one-quarter (1/4") to one-half
(1/2") inch; plastic film - one (1) millimeter; and plastic molding
- one-sixteenth inch (1/16").
19. During the investigative period, Veada employed approxi-
mately two hundred and twenty (220) employees.
20. During the investigative period, Veada's annual dollar
volume was approximately nine million dollars.
21. Veada had no history of prior child labor violations.
(JX 1).
III. ISSUES
The specific issues presented for resolution are:
1. Whether or not the staple gun used at Veada Industries,
[PAGE 5]
the Senco Model J air-powered light duty stapler, was within the
scope of the regulations contained under Hazardous Order No. 5,
contained in 29 C.F.R. Section 570.55.
2. Whether or not the penalty assessed against the Respon-
dent was appropriate and in accordance with the regulations
contained in 29 C.F.R. Section 579.5.
IV. FINDINGS OF FACT AND CONCLUSIONS OF LAW
Veada Industries, Inc. (Veada) manufactures boat seating and
fixtures, van seating, motorhome interiors and canvas products (Tr.
42).[1] One of its divisions is an upholstering department where
it affixes upholstery to boat seating, van seating and motorhome
interiors (Tr. 43). In the upholstery department, employees glue
foam to a wood or plastic seat and then use a staple gun to attach
vinyl, plastic film, webbing straps, velcro, plastic molding or
fabric to the wood or plastic seat (Tr. 45-47). The stapling
machine used to attach these materials is the Senco Model J ("Model
J"), which uses staples that are either one-quarter or three-
eighths inch in depth and five-sixteenths inch in width (Tr. 45).
On February 24, 1992, Ms. Vera McGuire, an inspector for the
Wage and Hour Division, visited Veada Industries. During the
visit, she reviewed Veada's payroll records (Tr. 72). Ms. McGuire
discovered that Veada had in their employ five minors engaged in
the use of the Model J staple gun to affix upholstery to boat
chairs. The minors were: Paul E. Borkholder, born April 27, 1974;
Harvey Hershberger, born October 24, 1974; Mark Hershberger, born
April 20, 1973; Clarence Miller, born December 12, 1974; and Eric
Schmucker, born June 3, 1975.[2] Ms. McGuire felt that the
practice might be a violation of the regulations and recommended
that Veada discontinue it until further notice (Tr. 72-73). Veada
complied with the recommendation and did not permit the minors to
operate the Model J staple guns (Tr. 73-74). Due to their
inability to use the Model J staple guns, the minors were subse-
quently laid off (Tr. 54). After reviewing the practice, Wage and
Hour determined that Veada had committed five violations of
Hazardous Order No. 5[3] and assessed a $5,600.00 penalty (PX 2).
V. DISCUSSION AND APPLICABLE LAW
Section 12(c) of the Fair Labor Standards Act prohibits
oppressive child labor. Oppressive child labor is defined at
Section 3(1) as a condition of employment where
any employee between the ages of sixteen and
[PAGE 6]
eighteen years is employed by an employer in any occupation which
the Secretary of Labor shall find and by order declare to be
particularly hazardous for the employment of children between such
ages or detrimental to their health or well being; . . .
Under this statute, the Department of Labor has issued a
number of hazardous occupation orders where it has found certain
employment to be "particularly hazardous" or "detrimental to the
health or well being" of sixteen and seventeen year olds. One such
hazardous occupation order is Hazardous Occupation Order No. 5 (HO
5), found at 29 C.F.R. §570.55(a)(1), which prohibits "[t]he
occupation of operating power-driven woodworking machines . . . "
The term "power-driven woodworking machine" is further defined by
HO 5 to mean:
all fixed or portable machines or tools driven
by power and used or designed for cutting,
shaping, forming, surfacing, nailing, sta-
pling, wire stitching, fastening, or otherwise
assembling, pressing, or printing wood or
veneer. 29 C.F.R. §570.55(b)(1).
The issue is whether the Regulation prohibits minors from using a
staple gun to attach material (vinyl, velcro, upholstery, carpet,
etc.) to wood or veneer. The Plaintiff argues that the Defendant's
practice of allowing minors to use staple guns to staple upholstery
to boat seats falls within the regulations because the regulation
prohibits minors from using staple guns to attach any material to
wood or veneer. The Defendant argues that their practice of
allowing minors to use staple guns for attaching upholstery to boat
seats is not within the regulation which only prohibits minors from
using staple guns in the assembling of wood or veneer.
The controlling language of the Regulation at 29 C.F.R.
§570.55(b)(1) is contained in the definition section which
reads:
[t]he term power-driven woodworking machines
shall mean all fixed or portable machines or
tools driven by power and used or designed for
cutting, shaping, forming, surfacing, nailing,
stapling, wire stitching, fastening,
or otherwise assembling, pressing, or
printing wood or veneer. (emphasis added)
Black's Law Dictionary defines otherwise as meaning either in a
different manner or or in other ways. Black's Law
Dictionary 1101 (6th ed. 1990). This language implies that the
words preceding
[PAGE 7]
assembling (i.e., stapling) are more specific words that fall into
the general category that follows (i.e., assembling).
The preceding words (cutting, shaping, forming, surfacing, nailing,
wire stitching, fastening) are all processes that may be involved
in assembling, pressing and printing wood or veneer. The defini-
tion is giving some examples of the ways in which the assembling,
pressing or printing of wood or veneer can be accomplished. That
being the case, the prohibition centers around power-driven
woodworking machines that are used to assemble, press or print wood
or veneer. The Model J staple gun used by the minors at Veada is
not capable of assembling wood or veneer (Tr. 48). Therefore, the
minors' use of the staple gun to upholster boat seats is not a
violation of the regulation.
Additional support is given to this interpretation when
differences in staple guns are noted. The Model J staple gun is
used for attaching upholstering while other more powerful staple
guns are used for the assembling of wood or veneer. The regulation
in question is intended to protect minors from engaging in
hazardous activities at work. A hazardous activity is an activity
"full of risk, perilous." Random House College Dictionary
608 (Revised ed. 1980). Nothing in the record establishes that the
operation of Model J staple gun is full of risk or perilous. A
common injury associated with the Model J is a puncture wound which
only necessitates a tetanus shot and a band-aid (Tr. 56). The only
other type of injury discussed in the record was a single case of
an eye injury caused when the air expelled by the gun blew sawdust
into an employee's eye (Tr. 68). A report completed by the
Children's Bureau of the United States Department of Labor on the
dangers of woodworking machines acknowledges that staplers "[a]s a
class are not considered as hazardous as some of the other machines
used in woodworking plants because they seldom cause injuries
resulting in amputation of a member (PX 3)." In fact, Occupational
Safety and Health Administration (OSHA) regulations do not require
a safety for the Model J (Tr. 57, RX 3). OSHA normally requires
safeties on heavy duty machines capable of inflicting serious
bodily injury if handled improperly. See OSH Rep. 31:3314
§1926.302(b)(3) (BNA). Based on the above information, the
Model J staple gun lacks the power needed to consider its use a
hazardous activity. On the other hand, staple guns capable of
assembling wood or veneer are "full of risk and perilous." Jim
Fleagle, the Controller at Veada[4] , explained that wood assem-
bling staple guns are capable of inflicting severe injury if fired
in an inappropriate manner (Tr. 59). He stated that the force and
power of a wood assembling staple gun is much stronger than a Model
J because "the gauge of the wire is much heavier." He continued:
"[t]he depth is much longer and they (the staples) are put in with
a much more high
[PAGE 8]
powered type stapler. They are an anchoring type staple (Tr. 53)."
Unlike the Model J staple gun, the wood assembling staple guns are
considered dangerous enough to necessitate a safety (Tr. 59).
Because the regulation is designed to protect minors from hazardous
activities at work and there is no evidence that the Model J staple
gun poses a serious hazard, I find that the regulation does not
apply to the instant case.
Assuming arguendo that the Respondent had violated the
regulation, the penalty assessment is nonetheless excessive.
The Wage and Hour Division assessed a $5,600.00 civil money
penalty against Veada. This amount was reached by completing the
WH-266 Child Labor Civil Money Penalty Report (WH-266) (PX 2). WH-
266 is always used when computing child labor violation penalties
(Tr. 28). WH-266 is comprised of four parts - parts A through D.
Part A determines what factors are involved in the violation. In
the present case, Wage and Hour checked off two factors - a
Hazardous Order violation (HO-5) and the involvement of multiple
minors (PX 2). Part B determines the amount of the penalty by
using a pre-established dollar amount for a violation multiplied by
the number of violations. In the present case, Wage and Hour found
two violations of the Hazardous Order applying to 17 year olds,
which carries a pre-determined penalty of ,000.00, for a total of
$2,000.00. Wage and Hour found three violations of the Hazardous
Order applying to 16 year olds, which carries a pre-determined
penalty of ,200.00, for a total of $3,600.00. Combined, this
results in a $5,600.00 penalty. Part C allows for reductions in
the penalty when appropriate. No reductions were made in this
case. Part D represents the grand total of the monetary penalty
which, in this case, remained at $5,600.00.
Twenty nine C.F.R. §579.5 lists the factors to be
considered when determining the amount of the civil penalty. The
pertinent parts are summarized as follows:
(c) In determining the amount of such penalty
there shall be considered ... the gravity of
the violation taking into account ... any
history of prior violations, any evidence of
willfulness or failure to take reasonable
precautions to avoid violations; the number of
minors illegally employed, the age of the
minors ...; the occupation in which the minors
were so employed ...; exposure of such minors
to hazards and any resultant injury to such
minors; the duration of such illegal employ
[PAGE 9]
ment; and as appropriate, the hours of the day in which it occurred
and whether such employment was during or outside school hours. 29
C.F.R. §579.5(c).
As applied to Section C, the circumstances in the present case
merit a reduction in the penalty. Veada had no previous child
labor violations. The Plaintiff acknowledged that the violation
was not willful. There is no showing that Veada failed to take
reasonable precautions to avoid the violations inasmuch as they
never knew that their conduct could be a violation. The Regula-
tion, as discussed supra, is ambiguous and Veada reasonably
believed that any prohibition applied only to wood assembling
staple guns (Tr. 63-64, 78). This ambiguity is further evidenced
by the fact that the compliance inspector, Vera McGuire, was not
sure whether Veada's conduct was a violation (Tr. 54, 72-74). It
appears clear from the record that Veada would have complied with
the regulation had they suspected it applied to upholstering (Tr.
65-66). The five minors were not exposed to hazards and none of
them suffered resultant injuries (Tr. 56). As discussed
supra, the staple gun used by the minors was incapable of
inflicting serious bodily injury and the only known injuries
associated with it were minor puncture wounds with one instance of
a minor eye injury (Tr. 56, 68). The duration of illegal employ-
ment was minimal - when informed that their conduct might be a
violation of the order Veada immediately discontinued having minors
use the Model J (Tr. 73-74). Finally, none of the minors were
employed during school hours. The minors were Amish and had
completed their formal schooling at the age of 16 (Tr. 55).
The regulation also lists other factors to be considered in
determining whether the violation was de minimis. The pertinent
parts are summarized as follows:
(d)(1) the person so charged has given credi-
ble assurance of future compliance and whether
a civil penalty in the circumstances is neces-
sary to achieve the objectives of the Act; or
(2) that the violations themselves involved
no intentional or heedless exposure of any
minor to any obvious hazard or detriment to
health or well being and were inadvertent ....
Veada's history of no prior violations and their prompt compliance
with Wage and Hour's request to desist is credible assurance of
future compliance. There was no intentional or heedless exposure
of any minor to any obvious hazard. The staple gun used by
the
[PAGE 10]
minors posed no serious risk (Tr. 56). Any detriment to the
minor's health or well being would have been inadvertent because
Veada had no reason to believe they may have been in violation of
the Act (Tr. 54, 63-64, 72-74, 78).
The Plaintiff argues that WH-266 does not allow for a de
minimis finding when more than one violation is involved. Donald
Laurent, District Director of Wage and Hour in South Bend, Indiana,
testified that the Department of Labor is required to assess a
penalty when more than one violation occurred (Tr. 28). In
support, Mr. Laurent testified that "de minimis" is defined on WH-
266, Part A, Block 6, as "less than one employee, less than one
minor (Tr. 33)."[5] However, nowhere on form WH-266 is de
minimis defined. De minimisis not defined in
the Act or the regulations, and there is nothing in the regulations
which states that a violation cannot be considered de minimis if
more than one minor is involved. The Plaintiff's explanation for
their interpretation of the meaning of de minimis is arbitrary and
unsupported by the regulations. The method for determining whether
a de minimis violation has occurred is by considering the factors
provided in Section (c) and (d) parts (1) and (2), discussed
supra. These factors establish that any violation committed
by Veada was de minimis and does not merit a $5,600.00 penalty.
Accordingly, I find that a de minimis violation of HO-5 under the
present circumstances would warrant a fine of no more than $50.00
for each violation or a total of $250.00.
VI. ORDER
It is, therefore, ORDERED that the determination of the
Administrator of the Wage and Hour Division finding Veada Indus-
tries, Inc. to be in violation of the Act and the assessment of a
civil money penalty in the amount of $5,600.00 is hereby REVERSED.
This decision shall constitute the final order of the Secretary
unless appealed within 30 days of the date of this Decision and
Order.
___________________________
ROBERT L. HILLYARD
Administrative Law Judge
[ENDNOTES]
[1] In this decision, "PX" refers to the Plaintiff's Exhibits,
"RX" refers to the Respondent's Exhibits and "Tr." refers to the
Transcript of the hearing.
[2] All the minors are Amish. Amish children attend school
until they are sixteen and then enter the work force. The minors
at issue in this case finished their formal schooling and went to
work at Veada (Tr. 55).
[3] The five violations stem from the fact that five minors were
found to be engaged in the practice.
[4] Mr. Fleagle is familiar with wood assembling staple guns
because Veada uses them in their woodworking department. Minors
are not allowed to handle them (Tr. 54).
[5] I believe Mr. Laurent meant to say that de minimis is
present only if the violation involved one minor or less. Mr
Laurent had earlier testified to this proposition (Tr. 28) and
the Plaintiff adopted this interpretation in their Post-trial
Memorandum of Law.
