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USDOL v. Elderkin, 1995-CLA-31 (ALJ Dec. 14, 1998)

U.S. Department of Labor
Office of Administrative Law Judges
7 Parkway Center
875 Greentree Road, Room 290
Pittsburgh, PA 15220

(412) 644-5754

Date Issued: December 14, 1998
Case No.: 1995-CLA-31

In the Matter of:

UNITED STATES DEPARTMENT OF LABOR,
    Complainant,

    v.

MERLE ELDERKIN, d/b/a
ELDERKIN FARM,
    Respondent.

APPEARANCES:

Marc G. Sherris, Esq.
U.S. Department of Labor
    For the Complainant

James E. Westman, Esq.
    For the Respondent

BEFORE: GERALD M. TIERNEY
    Administrative Law Judge

DECISION AND ORDER

   This case arises under the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §201 et seq., (hereinafter referred to as "the Act") and the regulations promulgated thereunder at 29 C.F.R. Parts 570 and 579. A formal hearing


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was held on April 28, 1998, in Buffalo, New York, with both parties being afforded full opportunity to present evidence. Respondent's Exhibits A through D were admitted into evidence. Complainant's Exhibits 1 through 17 were admitted at the hearing but Exhibits 15 and 16 were subsequently excluded in an order issued July 23, 1998. Therefore, Complainant's Exhibits 1 through 14 and 17 are properly part of the record. The parties also submitted post-hearing briefs. 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.

ISSUES

   Many issues were resolved prior to the hearing in an Order Granting Complainant's Motion for Summary Decision to Establish Findings of Fact and Conclusions of Law and for Preclusion Order Pursuant to the Court's Order Granting Sanctions issued on April 16, 1998. Judge Vittone had originally issued the Order Granting Sanctions on August 12, 1996, pursuant to 29 C.F.R. §18.6(d)(2) because of the Respondent's failure to comply with Orders and discovery requests. This August 12, 1996 Order Granting Sanctions sanctioned the Respondent under §§18.6(d)(2)(i)-(iv). The Complainant then moved for a summary decision pursuant to §18.40(a) on the facts which were established as adverse to the Respondent pursuant to the Order Granting Sanctions including employer coverage under the Act, enterprise coverage under the Act and 56 violations of 29 C.F.R. Part 570 for eight minors. The Findings of Fact and Conclusions of Law that were established in the April 16, 1998 order are attached as Exhibit A and hereby incorporated into this decision.

   The issues remaining at the time of trial were:

1. Whether Peter Gage had his right arm severed while operating a tractor over 20 horse power attached by power take off (PTO) to a feed mixer (non gravity type self-unloading wagon) on the night of January 1, 1995;

2. Whether Peter Gage was an employee as defined by section 3(e) of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §201 et seq (the "Act"), when he suffered his injury, in violation of 29 C.F.R. §§570.71(a)(1) and (2)(ii); and

3. The appropriateness and reasonableness of the civil money penalties assessed in the amount of $71,000 pursuant to 29 C.F.R. Part 579.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

   Peter Gage ("Gage") was born on February 28, 1984 (See Exhibit A, pg. 2). At the time of the hearing he was thirteen years old (TR at 19). He testified that on the night of January 1, 1995 he had an accident at the Elderkin Farm while he was watching the scale on the feeder wagon (TR at 19-20).1 He was ten years old at the time. Gage testified that he worked on the Elderkin


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farm four or five months before the accident, apparently to work off a debt for broken windows (TR at 21, 25-27). He described how his uncles shot out windows with B.B. guns and the Respondent blamed Gage (TR at 25-27). He said the Respondent made him "come down there" but did not talk to him about the broken windows (TR at 26, 53). However, he did say that he was responsible for paying for the windows and the Respondent made him "come down there and work them off. That's how he kind of said it, yeah" (TR at 27). He said he did not have to pay for the windows outright because he did not have any money (TR at 54). He testified at the hearing that he did not get paid for working on the farm (TR at 36). He stated that if he did not "go down there", his stepfather would get in trouble and he did not want him to get in trouble (TR at 36).

   Gage has known the Elderkins for a long time and at the time of the accident, was living about three quarters of a mile down the road from the farm (TR at 31). He testified that he visited the farm a lot, but always with either his stepfather, Frank, or his mother (TR at 32). He testified that every time he worked on the farm, Frank was there and he considered himself Frank's helper (TR at 37-38).

   On January 1, 1995, he began work on the farm in the morning (TR at 23). During the day, he helped feed the calves, scraped manure from the barn and helped his stepfather with the feeder rigging. Sometime during the day, Merle Elderkin ("Respondent") asked Gage if he was working (TR at 24). When Gage replied yes, Respondent said "you better be." Gage understood this comment to be serious (TR at 25). Even though Gage testified as to the specific chores he performed that day, later in his testimony, he claimed that the only thing he remembered was watching the feed wagon (TR at 33, 49).

   Gage described how the scale on the feeder wagon has a screen that measures how many pounds of feed are in the wagon and there is a PTO that hooks up to the feed wagon with a spinning spiral blade that mixes the feed as it turns (TR at 20). At the time of the accident, Gage's stepfather, Frank Strohauer was present and was in the loader putting feed in the wagon but then left to get more feed (TR at 20-21, 29). His stepfather taught Gage how to read the scale on the feed mixer (TR at 22). According to Gage, his stepfather had worked at the farm for three or four years (TR at 25; PX 14). Gage testified that he had turned the feed mixer on and off before by stepping on one step of the tractor and pulling the lever (TR at 22).

   On January 17, 1995, Gage gave an oral statement to Investigator Richard Chenu from his hospital room (PX 14). The statement was written by Investigator Chenu and read back to Gage and he agreed it was correct. Gage did not sign the statement because he is right handed and his right arm was injured and his left hand was being hooked to an I.V. as the interview ended. Gage stated that he worked at the Elderkin farm for the past three years ever since he got home from foster care and was paid $15.00 a day in cash by Mr. Elderkin until the incident with the broken windows. He stated that he worked each day after school and on weekends and he would walk to the farm from his house. He worked as late as 10 p.m. to midnight. His duties included feeding the cows and calves and milking the cows. He would mix


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powdered milk with water and feed it to the calves in a bottle. For milking the cows he would dip the udders into iodine and wipe them off with a rag and would sometimes attach the milker to the udders. He helped his stepfather feed the cows using the tractor and feed wagon. He would push a lever on the tractor to make the auger push the feed out into a bucket. When it was full, he would stop it with the lever. His stepfather would be in the loader. He also scraped cow manure in the main parlor and cleaned out the bunks where the cows sleep and said he rode and drove a tractor and helped Andy Elderkin fix tractors by getting parts and holding things for him while he fixed them.

   Gage stated that there were other kids who worked on the farm, including Brian Chadwick who helped a man named Sam in the barn and milking house. Daniel (Danny) Chadwick also worked on the farm and would help with the iodine but was not allowed to hook up the milker. Gage's sister Elizabeth only worked on the farm three or four days but got in trouble when she put a milker on the wrong way.

   Also in that statement, Gage said he was supposed to be waiting in the car when the accident happened. His stepfather was loading up the feed mixer and Gage got out of the car to look at the scales on the feed wagon. His stepfather went to get more feed when the PTO moved closer and caught the strings off of his snowsuit and pulled him in, severing his right arm.

   There was testimony from Joseph O'Connor, a farm labor specialist and investigator employed by the U.S. Department of Labor, wage and hour division (TR at 55). He began an investigation of the Elderkin Dairy Farm on January 17, 1995 when he and Investigator Chenu had a brief meeting with Respondent (TR at 57-58). According to Mr. O'Connor, the Respondent told him that he did not have any employees but used independent contractors to perform work on the farm (TR at 60). The Respondent then advised the investigators to contact his attorney and the meeting was ended (TR at 60-61). Until the Respondent referred the investigators to his attorney, he had answered all of their questions (TR at 93). The investigators left some written information pertaining to child labor laws with the Respondent (TR at 61).

   Mr. O'Connor described his meeting with Gage which took place on January 17, 1995, in Gage's hospital room (TR at 64-65). Gage was lucid and talkative and spoke to the investigators about the circumstances surrounding the accident.

   The investigators met with the Respondent's former attorney, Mr. Barone, on February 1, 1995 (TR at 69). During this meeting, Mr. O'Connor testified that he left several documents concerning child labor with Mr. Barone (TR at 72).

   Subsequent to the February 1 meeting, Mr. O'Connor continued to gather information regarding employees and the nature of the farm's business and determined that minors other than Gage worked at the farm (TR at 73). During this time period, several letters were sent to the Respondent and/or his attorney requesting information. A letter dated January 31, 1995 was addressed only to Mr. Barone and not the Respondent (PX 8a). A letter dated February 23, 1995, was also addressed to Mr. Barone with a cc to the Respondent but no address was listed (PX 8b).


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   On February 21, 1995, he spoke to a minor employee named Brian Chadwick (TR at 73, 90). Brian Chadwick indicated that he had worked in various capacities primarily at the pig farm and on the evening prior to this conversation, operated a chain saw at the Respondent's residence to cut firewood and immediately prior to this conversation, operated a tractor to plow snow (TR at 73-75, 88).

   Mr. O'Connor testified that a final meeting was held with the Respondent on March 31, 1995 at the farm at which himself, Mr. Chenu, the Respondent, Andy Elderkin, Mr. Barone and Sheriff Rater were present (TR at 78). At this meeting, the Respondent brought the tractor and feed mixer to the front of the farm for examination by the investigators and there was a discussion about the findings of the investigation (TR at 79). Mr. O'Connor took some photographs of the equipment and made some notes (TR at 82-84, 101-104; PX 7). The Respondent's son, Andy Elderkin showed the investigators other equipment that day as well (TR at 96-97, 106). Apparently, the investigators asked to tour other areas of the farm but were prevented by Mr. Barone who told them to get a subpoena (TR at 79, 81, 106, 111). As of March 31, neither the Respondent nor his attorney provided the investigators with the information requested in the two letters (TR at 85).

   Another Department of Labor investigator, Richard Chenu, also testified at the hearing. Mr. Chenu prepared the WH-103 form which summarized the findings of the investigation of Respondent (TR at 117; PX 4). Since violations were found, a final conference was held and then civil monetary penalties were assessed using form WH-103 (TR at 118-120; PX 5). He gave detailed testimony on how and why the penalties were assessed which is summarized below.

   Mr. Chenu described in detail, the piece of machinery that was involved in Gage's accident (TR at 123-124). The tractor was a model 1066 International tractor that was hooked, by way of the PTO which supplies power, to a Lucknow feed mixer which is used to mix the feed and then various power screw-type augers disperse the feed out of the mixer. He explained that the feed mixer is considered a non-gravity self unloading wagon because it is emptied with a chute by way of the screw-type augers which push the feed mixture out of it (TR at 124).

   Testimony was elicited from Gregory Capuchinski, who sold and traded farm equipment to the Respondent (TR at 161).2 He maintains a business relationship with the Respondent in that the Respondent consults him on service problems (TR at 169).

   Mr. Capuchinski explained that the feed mixer is a total mix ration machine which mixes different feed for the cows to eat and is run by a tractor that is hooked to the mixer with a power take off shaft (TR at 165). He further explained that the tractor has to be operated from the seat because all of the controls are at that level and a person could not sit in the cab of the tractor and operate the computer panel at the same time (TR at 166).


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   Andrew Elderkin, the Respondent's son, testified that even though he has worked on the farm full-time since 1982, he is not an employee (TR at 173-74). He stated that his father, his brother Darren, himself and Sam Hoard regularly work on the farm (TR at 177). The farm is 700 acres with a little under 300 heads of cattle and the farm produces corn and grass for feed and primarily milk. In response to a question of how so few people could run such a large farm, he stated that they worked a lot of hours and many things are mechanized and run by machine (TR at 177-78). He testified that the farm has been having financial trouble over the last few years (TR at 178).

   He recalled meeting with the investigators and claimed that he answered all of their questions and showed them everything they wanted to see on the farm (TR at 176).

   Andrew Elderkin testified that him and his family had known Gage for three or four years before the accident and he had repeatedly told Gage's mother, Marjorie, not to bring him around the farm (TR at 181, 192). He also testified that the farm's policy was not to allow children on the farm because of the risk factors (TR at 178). He testified that he has seen some children around the farm with their parents who were part-time workers but since the accident, the farm has not hired part-time workers (TR at 179-180).

   Andrew Elderkin explained that the someone sitting in the tractor seat of the mixer feeder wagon could not operate the computer screen at the same time (TR at 185). He described how the computer screen has backdrop lighting that allows it to be seen during the day or at night and it also has a flashing alarm light (TR at 184-185). The computer screen is right about where the PTO shaft rotates (TR at 186). At the time of Gage's accident, the safety shaft was broken because it wore out and a new one was on order from the manufacturer (TR at 185-186). He stated that in the winter, the tractor is only used with the feed wagon and on January 1, 1995, he would have set it up to run that day (TR at 184).

   Andrew Elderkin became aware of the accident when Gage's stepfather ran into the milk house screaming (TR at 187). He tried to help Gage by wrapping a piece of cloth around his arm to stop the bleeding (TR at 188). He then rushed Gage to the Respondent's truck and they took him to the fire department. He observed that the garment Gage was wearing was ragged and oversized (TR at 191). Andrew Elderkin was obviously upset by the incident and stated that it affected his attitude about running the farm because he would never allow children there no matter what (TR at 189).

   The Respondent, Merle Elderkin, testified that his business is in financial trouble (TR at 198). He has a $200,000.00 judgement against him that is being paid apparently through garnishment of his milk proceeds (TR at 199). He is also in arrears on county taxes for $135,000. As a result, the Respondent filed for bankruptcy (TR at 199-200; RX C, D). He has only been able to make minor capital investments in the farm over the past few years because of the lack of income (TR at 202). He and his son Andy testified that the farm needed improvements that they were not able to make (TR at 178, 203). The Respondent also testified to his limited personal assets as well (TR at 204).


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   The Respondent testified that the farm's policy since he started farming has been to never allow children on the farm wherever equipment is being used because of the danger (TR at 204). He claimed that temporary workers brought their children onto the farm or the children would come there on their own (TR at 205). He tried to chase the children off the farm but was not always successful (TR at 206). Now, he does not employ temporary workers because he does not want to risk them bringing their children onto the farm (TR at 206-207). He assured the Court that children will never be on his farm again (TR at 207-208).

   There was testimony from the Respondent regarding his relationship with his former attorney, Nathaniel Barone and the status of the health of Mr. Barone and the Respondent at various times (TR at 213-218). The Respondent testified that his health in January of 1995 was not good because of an accident a year before that and a heart attack (TR at 210-211). Between January, 1995 and March, 1997, the Respondent had another heart attack and is totally disabled (TR at 211). He relies on his sons and Sam Hoard to help him.3 I find this testimony irrelevant for the purpose of contesting the sanctions issued in this case. The Respondent, through his new attorney, had a chance to contest the Motion for Summary Decision and cannot now offer evidence as to why he did not comply with the discovery at issue. On the other hand, the testimony is relevant for purposes of the civil monetary penalties because part of the reason the Respondent was assessed more money was falsification or concealment of child labor which is addressed below.

   The first time the Respondent saw Gage on January 1, 1995 was when his mother marched him in by the back of the hair apparently for his stepfather to discipline him for some unknown reason (TR at 220). Respondent chased Gage's mother away because he claims she had been drinking and was mouthy (TR at 221). He claims that his mother was always beating him up because she was always drunk (TR at 205). Gage did not remember this incident (TR at 32). He remembered Gage was wearing his father's snowsuit which was too big (TR at 221). The second time he saw Gage was after the accident (TR at 221-222). According to Respondent, Gage's mother was abusive and Gage came to the farm to get away from her (TR at 224). Gage's stepfather was on the farm visiting Andy or helping Andy (TR at 224). Respondent testified that Frank Strohauer was financially indebted to him for back rent but did not work for him on the farm until after Gage was hurt (TR at 236). Frank Strohauer rented a trailer from the Respondent located on the farm premises (TR at 235).

   Respondent testified that he never hired Gage to work on the farm and never paid him any money for work (TR at 225). The Respondent recalled an incident when Gage and another child threw stones and broke some windows in a building he owned (TR at 226-227). Respondent stated that he had nothing to do with Gage's penalty. Instead, Gage's parents punished him for the incident by making him pick up junk from around their trailer and carry it across the road to the dump. He stated that he loved Gage and tried to do the best he could for him (TR at 226). Respondent gave Gage a calf and a pig which Gage kept where he lived.


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   The Respondent recalled meeting with two representatives from the Department of Labor, Mr. O'Connor and Mr. Chenu, when they came to his home on January 17, 1995 (TR at 209, 231). Respondent did not understand what they were saying and referred them to his attorney (TR at 209-210, 213, 240). He claims he instructed his attorney to provide the requested documents but did not know if he did because both of them were sick (TR at 213). He also remembered a time when the government wanted to tour his farm on March 31, 1995 and Mr. O'Connor and Mr. Chenu asked to see certain things (TR at 217-218, 234). Respondent testified that he directed his son to show Mr. O'Connor what he wanted to see and did not prevent them from seeing anything on the farm but his attorney did (TR at 218, 234).

Injury and employment status

   It is undisputed that Peter Gage was injured on the evening of January 1, 1995 when his arm was severed by a piece of farm equipment on Merle Elderkin's farm. What is disputed is whether Gage was an employee at the time. Respondent claims that Gage was injured while "fooling around" with some farm equipment and anyone could have been caught on the moving parts because the guard for the PTO was broken. The Government contends that Gage was an employee and was injured while performing work for the Respondent's benefit. An employee is defined as "any individual employed by an employer." 29 U.S.C. §203(e). An employer "includes any person acting directly or indirectly in the interest of an employer in relation to an employee. . ." 29 U.S.C. §203(d); 29 C.F.R. §570.70(c)(2). The word "employ includes to suffer or permit to work." 29 U.S.C. §203(g); 29 C.F.R. §570.70(c)(2)(iii).

   Although Gage gave two different time periods for the length of his employment, three years in his statement (PX 14), and four to five months at the hearing (TR at 21), his familiarity with and description of the farm and the machinery supports a finding that he was an employee. Gage received compensation in the form of cash or credit towards the broken windows and Respondent received a benefit in having Gage perform tasks necessary to the maintenance of the farm which in turn helped produce a profit from the milk sales. There is no requirement that an employee punch a time card or work set hours. Gage stated that he worked every evening after school and on weekends. Even though the relationship between Gage and the Respondent does not fit the conventional notion of an employer/employee relationship, it does qualify as such a relationship.

   Even though the Respondent denies employing Gage, I find that the Respondent permitted Gage to work on the farm and had knowledge of the work he performed. The Respondent was aware of Gage's presence on the farm because he acknowledged that Gage spent a lot of time there to escape from his abusive mother. I also believe that Gage's stepfather worked at the farm before and after the accident and Gage accompanied him and assisted him. It is hard to imagine how a man could operate such a large dairy farm of 700 acres with 300 heads of cattle with only the help of his two sons, especially with the Respondent's health problems. It is likely that the temporary workers brought their children onto the farm and it is apparent that


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the Respondent put them to work, as evidenced by the numerous violations found. For whatever reason, the Respondent is extremely reluctant to admit that he has any "employees," including his son who testified that he worked at the farm full-time since 1982. I do not believe the Respondent has been totally forthcoming regarding the help he received on the farm as far as employees.

   The law provides that "no employer shall employ any oppressive child labor in commerce in the production of goods for commerce or in any enterprise engaged in commerce or in any enterprise engaged in commerce or in the production of goods for commerce." 29 U.S.C.A. §212. According to 29 C.F.R. §570.70(a), section 12 of the Act applies to an employee below the age of 16 employed in agriculture in an occupation that the Secretary of Labor finds and declares to be particularly hazardous for the employment of children below the age of 16. According to 29 C.F.R. §§570.71(a)(1) and (2)(ii), operating a tractor of over 20 PTO horsepower and operating or assisting to operate (including starting, stopping, adjusting, feeding, or any other activity involving physical contact associated with the operation) a feed grinder . . . or the unloading mechanism of a nongravity-type self-unloading wagon or trailer are considered particularly hazardous for the employment of children below the age of 16.

   I find that Peter Gage had his right arm severed while operating the feed mixer (non gravity type self-unloading wagon) on the night of January 1, 1995 and was an employee as defined by section 3(e) of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §201 et seq (the "Act"), when he suffered his injury, in violation of 29 C.F.R. §570.71(2)(ii). He assisted in the operation of the feed mixer by reading the scale on the mixer computer screen. I also find that he operated the tractor in violation of §570.71(a) because of his testimony that he had turned the feed mixer on and off before by stepping on one step of the tractor and pulling the lever (TR at 22).

Civil money penalties

   The Respondent argues that no assessment should be upheld but certainly agrees that an Order should be entered that he be admonished to insure no reoccurrence of the violations, with an understanding of the propensity for punishment if there should be a reoccurrence. The Government's position is quite the opposite in that it argues that this case demands the imposition of the highest civil money penalties in order to achieve the enforcement purposes of the child labor provisions of the Fair Labor Standards Act.

   The Administrative Review Board (ARB) has held that a presiding ALJ has the authority to review the case and to duly consider all of the factors delineated by the pertinent regulations. Administrator v. Thirsty's, Inc., 1997 WL 453588 (ARB, May 14, 1997). The ARB acknowledged that according to 29 C.F.R. §§580.12(b) and (c), an ALJ's scope of authority to change the Administrator's assessments is untrammeled and specifically includes a determination of the appropriateness of the assessed penalty. Id. The ARB further found that the review and modification of an assessed CMP is not an arrogation of the Administrator's authority, but a proper adjudicatory process. Id.


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The regulations at §580.12 (b) and (c) entitled "Decision and Order of Administrative Law Judge" provide, in part, that the decision of the (ALJ) shall be limited to a determination of whether the Respondent has committed a violation of section 12 . . . and the appropriateness of the penalty assessed by the Administrator and the decision . . . may affirm, deny, reverse, or modify, in whole or in part, the determination of the Administrator. What follows is an explanation of how the penalties were computed and a determination of the appropriateness of the assessed penalty.

   Penalties were originally assessed as $141,000 but were reduced to $71,100 because of a $10,000 per minor limit (TR at 129, 133; PX 4, 5). Investigator Chenu explained the process of computing the monetary penalties (TR at 117-134). He prepared WH-103 (PX 4) to summarize the findings of the investigation (TR at 117). Since violations were found, a final conference was held and he next prepared WH-266 (PX 5), which is the form used to compute the penalties (TR at 118-119). He testified that the WH-266 form accounts for the size of the business (part E), the gravity of the violation (parts A, B and D), history of prior violations (part A), evidence of willfulness (aggravating factor), the number of minors illegally employed (part A, item #6 and assessment for each minor), the age of the minors (parts B and D), records of the required proof of age (item #13 and aggravating factors), occupations of the minors (parts A, B and D) and exposure of minors to hazards that result in injury (parts A and D).

   As a preliminary matter, civil monetary penalties (CMPs) are to be recommended if any of the factors in Part A of form WH-266 are present (PX 5). In this case, four out of six factors were checked; 1) death or serious injury, 2) child labor compliance was not assured, 5) any HO (hazardous orders) violation or employment under legal age occurred and 6) more than one minor was involved.

   Eight (8) minors, including Gage, were found to be illegally employed (TR at 117; PX 4). Their dates of birth were verified from school records (TR at 117). Civil monetary penalties were assessed for five and the other three fell under the hot goods action (TR at 126-127). Mr. Chenu explained that section 12C of the Fair Labor Standards Act allows for the imposition of civil monetary penalties if minors work for a covered enterprise or the minors are individually or closely related and directly essential to the production of goods which cross state lines. In this case, the goods which crossed state lines was milk and five minors were found to have been closely related and directly essential to the production of that milk. The three other minors fell under section 12A, the hot goods action, which included the minors even if they were not closely related and directly essential to the production of milk because they simply worked in and about an establishment that shipped goods in interstate commerce. Mr. Chenu stated that the investigators received documents from Western Tier Milk Coop, the Agricultural Marketing Program and Overland Dairy which indicated that the milk crossed state lines but could not produce these documents (TR at 146). Mr. Chenu claims that on January 17, 1995, the Respondent indicated that his milk was shipped to Ohio (TR at 152). He explained that a penalty would be assessed if any shipment of goods produced through child labor employment


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goes across state lines (TR at 153) making the Respondent's testimony that some of the dairy products he sells stay in the state of New York irrelevant (TR at 226).

   In Part B, a set amount for the CMP is listed in column 1 and is multiplied by the number of violations found in column 2 and any aggravating factors in column 3 to reach the total in column 4. The penalties cannot exceed $10,000 per minor. 29 C.F.R. §579.5(a). Part D penalties were only assessed for Peter Gage because he was the only employee who sustained a serious injury (TR at 122). A separate violation was assessed for each piece of equipment covered by the hazardous orders which in this case were the feed mixer and the tractor (TR at 123). Each violation for a serious injury for each piece of machinery was $8,500, or $17,000 total.

   In this case, each violation was multiplied by a category 2.0 factor because the investigators found falsification/concealment of child labor and failure to assure child labor compliance (TR at 129-130). Mr. Chenu testified that the Respondent concealed child labor because he told them he did not have any employees, much less minors, and the investigation revealed otherwise, various records were requested but not supplied and he failed to keep records for the minors (TR at 130). They also found failure to assure child labor compliance because the Respondent and his attorney were given information regarding the child labor laws and subsequently, Mr. O'Connor interviewed a minor who indicated that violations were ongoing.

   Pursuant to the authority granted under §580.12, I do not find that the category 2.0 multiplier was necessary in this case. The Respondent was already fined under Part B of form WH-266, number 13, for child labor record keeping violations (PX 5; TR at 132). The Respondent testified that he was cooperative with the investigation, referring any requests for documents or further information to his attorney (See TR at 213-219). I do not find that the Respondent was uncooperative and the penalties already assessed are sufficient to punish the record keeping violations. As for failure to assure child labor compliance, the information relied upon to establish this was the interview with Brian Chadwick.4 One activity described by Brian, operating a chain saw to cut firewood, was performed at the Respondent's home and not on the farm. He did not specify where the other activity, operating a tractor to plow snow, was performed and whether he was paid to perform either of these tasks. They did not corroborate Brian's allegations nor question the Respondent to verify his story. The Respondent did assure future child labor compliance at the hearing and because of the traumatic nature of this experience, I believe that Respondent will keep this promise. Therefore, the 2.0 multiplier is unnecessary. Taking away the 2.0 multiplier and using the $10,00 maximum penalty per minor reduces the penalties to $58,100. Using PX 13 and taking away the 2.0 multiplier, the fine for Greg Carlson is $7,275, for Carolyn Carson, $5,275, for Brian Chadwick, $9,075, for Elizabeth Gage, $8,375, for Peter Gage, $10,000 under Part B and $17,000 under Part D. These amounts total $57,000, which when added to ,100 for the hot goods violation equal $58,100.


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   Twenty nine C.F.R. §579.5 lists the factors to be considered when determining the amount of the civil penalty as follows:

(b) In determining the amount of such penalty there shall be considered the appropriateness of such penalty to the size of the business of the person charged with the violation . . . taking into account the number of employees employed by that person, dollar volume of sales, amount of capital investment and financial resources and such other information as may be available relative to the size of the business of such person. (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 employment; 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(b) and (c).

The mandatory language in subsections (b) and (c) makes clear that all of the specified elements must be considered in assessing the penalty.

   I find that the factors specified in 29 C.F.R. §§579.5(a)-(c) were properly considered except for the financial resources of the business. On the WH-266 form, part E allows for a reduction based on the size of the Respondent's business where only child labor record keeping and/or nonhazardous violations (Reg 3 hours) occurred and where no death or serious injury occurred during any illegal employment and where none of the "aggravating factors" on page 3 were applied (See PX 5). Part E nor any other part of WH-266 addressed the financial resources element specified in §579.5(b).

   Evidence was presented at the hearing which revealed that the Respondent's farming business is in serious financial trouble and he has filed for Chapter 13 bankruptcy. He has only been able to make minor capital investments in the farm over the past few years because of the lack of income and he and his son testified that the farm needed improvements that they were not able to make. The purpose of the child labor provisions is to protect the safety, health, well-being and opportunities for schooling of youthful workers. 29 C.F.R. §570.101. Presumably, the penalties imposed for violations of the child labor provisions serve to punish past violations and deter future violations. It is doubtful that the penalties are designed to drive violators out of business. In this case, considering the Respondent's financial condition, another large judgment against him could force him out of business entirely. Therefore, a reduction of the penalties is justified in order to serve as a punishment and a deterrent while at the same time not driving the Respondent out of business.


[Page 13]

Of course, a reduction does not lessen the seriousness of Peter Gage's injury nor excuse or justify the Respondent's employment practices in any way. To the contrary, I believe the Respondent is truly sorry for the events which happened and will suffer from the fact that he has violated the child labor laws and a serious injury was sustained as a result. In consideration of the above, I hereby find that a 50% reduction is appropriate. Therefore, the penalties are reduced to $29,050.

   A reduction in the penalty may also be appropriate if either of the two alternatives under §579.5(d) are satisfied. The criteria in subsection (d)(1) and (d)(2) are joined by "and",signifying that all criteria must be satisfied before the penalty can be decreased. Keesling v. Supermarkets General Corp., d/b/a Pathmark, 90-CLA-34, Final Decision & Order (Sec'y Jan. 13, 1993). According to §579.5 (d):

based on all the evidence available, including the investigation history of the person charged and the degree of wilfulness involved, it shall further be determined, where appropriate: (1) Whether the evidence shows that the violation is "de minimis" and that the person so charged has given credible assurance of future compliance and whether a civil penalty in the circumstances is necessary to achieve the objectives of the Act; or (2) Whether the evidence shows no previous history of child labor violations, 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 and there has been credible assurance of future compliance and whether a civil penalty in the circumstances is necessary to achieve the objectives of the Act. §§579.5(d)(1) and (2).

   The Secretary of Labor noted that "de minimis" is shorthand for the maxim "the law does not care for, or take notice of, very small or trifling matters." Echaveste v. Horizon Publishers and Distributors, 90-CLA-29, Sec'y Decision (May 11, 1994), aff'd on recon. (July 21, 1994) (quoting BLACK'S LAW DICTIONARY, at 388 (5th ed. 1979).

   Of course, the injury sustained by Peter Gage is not small or trifling. The fact that a serious injury was involved precludes a further reduction. Even though I believe the Respondent has given credible assurance of future compliance, I find that the injury and violations as to Peter Gage were not de minimis. As for the other minors, the amount of the violations and the fact that children as young as seven (7) years old were employed, also precludes any further reduction.

   As for §579.5(d)(2), again, I feel that the Respondent has given credible assurance of future compliance and the evidence shows no previous history of child labor violations. However, I cannot find that the violations involved no intentional or heedless exposure of any minor to any obvious hazard or detriment to health or well-being or were inadvertent. An examination of the violations (See PX 4) reveals that these children were exposed to dangerous farm equipment with motors and sharp moving blades and worked in


[Page 14]

manure pits and pens with bulls, boars, calves and sows. The feed mixer was especially dangerous, for children and adults, because of the missing safety device.

   Therefore, I find that no further reduction in penalties is warranted under §§579.5(d)(1) or (2). There is certainly no justification for not imposing any fees as the Respondent has requested nor do I wish to impose the highest penalties as the Government has requested. The penalties have been reduced to $29,050 as discussed above.

ORDER

   IT IS ORDERED that pursuant to 29 C.F.R. §580.12, the imposition by the Administrator, Employment Standards Administration, Wage and Hour Division, United States Department of Labor, of a civil money penalty in the amount of $71,100 against the Respondent is hereby reduced to $29,050.

      GERALD M. TIERNEY
      Administrative Law Judge

GMT/TLR/ir

NOTICE OF APPEAL RIGHTS

Pursuant to 29 C.F.R. § 580.13, any party dissatisfied with this Decision and Order may appeal it to the Secretary of Labor within 30 days of the date of this Decision, by filing notice of appeal with the Secretary of Labor, United States Department of Labor, Washington, D.C. 20210. A copy of the notice of appeal must be served on all parties to this Decision and Order and on the Chief Administrative Law Judge, United States Department of Labor, 800 K Street, N.W., Suite 400, Washington, D.C. 2001-8002. If no timely appeal is made, this Decision and Order shall be deemed the final agency action.

[ENDNOTES]

1 References to the record are as follows:

    RX = Respondent's Exhibits
    PX = Complainant's (Plaintiff's) Exhibits
    TR = Transcript of the April 28, 1998 Hearing

2 Mr. Capuchinski was also offered as rebuttal to Mr. O'Connor and testified that to the best of his knowledge, the handwriting beside the pictures in PX 7 was his brother's, Ted Capuchinski (TR at 163).

3 The Respondent testified that Sam Hoard is an older gentleman who retired from his father's farm and just does odds and ends for the Respondent (TR at 238).

4 Respondent's attorney tried to question Brian Chadwick's competence but did not produce any evidence or elicit any testimony indicating that he was retarded, contrary to the Respondent's closing brief, next to last page.



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