Administrator v. Chrislin, Inc., 1999-CLA-5 (ALJ Dec. 17, 1999)

U.S. Department of Labor

Office of Administrative Law Judges 2600 Mt. Ephraim Avenue Camden, NJ 08104 (856) 757-5312 856-757-5403 (FAX)

DATE: December 17, 1999
Case No: 1999-CLA-00005

IN THE MATTER OF:

JOHN R. FRAZER, ACTING ADMINISTRATOR
Wage and Hour Division,
U. S. Department of Labor,
   Complainant,

   v.

CHRISLIN, INC. D/B/A BIG WALLY'S AND
WALTER A. CHRISTENSEN
   Respondents,

Appearances:

Marc G. Sheris, Esq.
   For the Complainant

Evan Pickus, Esq.
   For the Respondents

Before: RALPH A. ROMANO
   Administrative Law Judge

   This is a proceeding to impose a civil money penalty for violation of the Fair Labor Standards Act, as amended, 29 U.S.C. 201 et seq, hereinafter "Act", and regulations issued thereunder at 29 C.F.R. 580, et seq.

   The matter was heard in New York City, New York on September 28 and 29, 1999¹ and final briefs filed by November 22, 1999.

   Complainant (hereinafter "Government") seeks a determination that certain violations of the Act have occurred, and that the amount of money penalties assessed, totaling $66,088² , was appropriate and reasonable.

   The Government called four (4) of the eight (8) minors in respect of whose work activities the subject penalties relate, and each testified as to various activities and circumstances surrounding their employment with Respondents. Also called by the Government was the investigator who conducted the subject investigation culminating in the subject assessment, and three other Department of Labor (DOL) employees.

   Respondents called one minor involved and one of the Respondents.

   The hazardous occupation violations (under 29 C.F.R. 570.61(a)(4)) were found by personal observations of the investigator, and interviews with minors (Tr. 36; 39; 41-2; 59-75; P-14 to P-16; P-19 to P-22). For minor Cutrona, since it was determined that she was injured while engaged in the hazardous occupation³ , a fine of $8,500 was levied (Tr. 141-2). For minors Ferri, Martinez, Somers, Dickey, Soble and Flegler, fines of $6,000 each were assessed (totaling $36,000), since they too were exposed to these hazardous job duties "...and simply through perhaps chance they were not injured themselves..." (Tr. 142). These assessments of $44,500 were further increased to $64,000 by a factor of 1.5 by reason of Respondents' knowledge of the child labor requirements (see Tr. 140-143; P-2; AGGRAVATING FACTORS; P-2, at 3).

   The total of the foregoing hours and hazardous occupation assessments ($68,012.40)⁴ was later reduced to $66,088 to account for $10,000 maximum caps as to Dickey and Cutrona (P-2, at 6; Tr. 146-7).

   Insofar as the amounts of basic fines as well as additional fines assessed, and independent of the DOL form used for calculation thereof (P-2), the DOL investigator testified that the subject violations were determined to be willful because: Respondents were aware of the child labor regulations; some minors (see. Tr. 262-4) were advised by Respondent Christensen that one had only to be 16 years of age to operate the slicing machine; Cutrona, after her injury, resumed slicing duties "...using a plastic bag to cover her [injured] hand"; one (unidentified) minor employee of Respondent advised the investigator that Respondent Christensen advised the minor to cease using the slicing machine if someone came into the store and looked "...like they came from the Board of health or Department and carrying a clipboard..."; and because sometimes only minors were working in the store, with a minor in charge of the store (Tr. 87-89; 99). Also, a DOL child labor specialist testified that, independent of the form used to compute the assessments (P-2), certain aggravating factors present in this case made it inappropriate to reduce the amounts of the hazardous occupation basic and additional fines imposed here, to wit: the occurrence of serious injury to Cutrona, the large percentage of minors in Respondents' workforce, Respondents' knowledge of the child labor laws, and a "heedless exposure" of minors to danger and disregard for their safety, via the use of a majority of minors working at one time in the store and/or putting minors in charge of the store (Tr. 151-153).

   Third, Respondents assert that the hazardous occupation fines against Ferri, Martinez, Somers, Dickey, Soble and Flegler (see P-2, at 2, column 4 - ,200 each increased by 5.0 factor to $6,000 each, totaling $36,000) were unwarranted because the basis for these fines, i.e., that these six employees were exposed to the same hazardous occupation as was the injured Cutrona⁵ , is unfounded. That is, that since only Cutrona was injured and not these other six employees, and since these other six employees were not hired with the intention as upon Cutrona's hiring that she use the slicer, there is nothing similar between Cutrona and these six employees justifying the similar increased fines (Empl' Br. at 8-10).

   Next, Respondents insist that the factors governing the determination of appropriate amount of the penalty contained at 29 C.F.R. 579.5 were not considered here. Instead, the DOL form WH-266 (P-2) was mechanically filled out, and this failed to account for and consider the regulatory standards and guidelines which should have been used in determining the appropriate amounts of fines (Empl' Br, at 10-22).

   Finally, it is urged that certain items of evidence used to establish the Government's case should, for various reasons (including inconsistencies, bad motive and bias in testimony, circumstances of interview, and outright fabrication of events), be given little, if any, weight (Empl' Br. at 22-34).

   At the outset, it is noted that Respondents advance no substantive defense to the imposition of the hours-violations assessments (P-2, at 1 - ,350 total for Dickey and Lebowitz), except to suggest that Respondent Christensen exercised "...due diligence..." culminating in a "...good faith belief that training these two minors was legal" (Empl' Br., at 34). But, this proposition that employment of minors in excess of lawfully restricted hours is excusable where the minors are being trained, finds no statutory, regulatory or decisional support, and Respondents fail to identify any such support. The uncontradicted evidence at trial establishes these hours violations cited as documented by Respondents' payroll records (see P-9; P-20; P-21; Tr. 52-4; Tr. 347-8; Tr. 317; Tr. 336). Also, no defense is raised as to the recordkeeping fine of $412.50 (P-2, at 1, line 13). The evidence of this violation (Tr. 50; 51; Tr. 139-40), being nowhere contradicted, is also accordingly found valid.

   Insofar as the proposition that the Flegler assessment is invalid because the investigation began, and Flegler was hired, at a time when Respondent-enterprise's sales volume was less than the statutory threshold, both 29 C.F.R. 779.266(b) and the decision reached in Martin v. Deiriggi, 1991 WL323416, (N.D. W.Va.), aff'd 985 F.2d 129, 4th Cir. 12/31/92, patently mandate a contrary conclusion. In pertinent part, 29 C.F.R. 779.266(b), the official interpretive statement of DOL relative to the meaning of the provisions of the Act governing the rights and obligations of retail employer-enterprises, states that where there is doubt as to whether an enterprise has an annual gross volume of sales in excess of that provided in the Act, the total of such sales "...during a 12-month period which immediately precedes the quarter-year..." (emphasis added) at issue shall govern. Here, the total sales of Respondents for the 12 month period immediately preceding the second quarter of 1997 (April 1996 through March 1997) is $518,019 (P-10), above the statutory threshold of $500,000. Accordingly, the Flegler assessment cannot be invalidated on this account.

   Respondents' argument that the Dickey fines, predicated upon his alleged regulatorily-prohibited cleaning of the slicing machine, are invalid, is well taken. Dickey testified only that he cleaned already disassembled/harmless parts of the slicer (guard and carrier), see D-5, D-6; Tr. 349; 354-5; Tr. 222-3. In pertinent part, the regulation involved, 29 C.F.R. 570.61(a)(4), considers an "...occupation[s] involved in the operation...of...[a]...power-driven machine[s], including ...cleaning such machine[s]..." (emphasis added), hazardous for minors. A meat slicing machine used in a retail delicatessen is specifically cited as an example of such a machine. However, the already disassembled harmless guard and carrier of a meat slicing machine cannot rationally be considered a machine at all! And the regulation prohibits only the cleaning of a machine. The evidence simply does not establish that Dickey cleaned a slicing machine in violation of the regulations. Neither of the decisions cited by the Government (EX A, B annexed to Gov't Br.) change this result, as neither case involves the same factual circumstance presented here, nor do these decisions even address the issue here to be resolved⁶ . Also, that Dickey once cut his finger while voluntarily removing a piece of meat from the slicing machine (Tr. 350), adds nothing to the propriety/validity of the making of this invalid (cleaning) fine. Accordingly, all fines predicated upon Dickey's alleged cleaning of the slicing machine,⁷ are hereby found invalid, and hereinafter deducted from assessments for which Respondents are responsible. Respondents' assertion that the same fatal weakness in the Government's assessment exists as to Somers, is without merit. The Somers' fine was levied for his use and cleaning of the slicer, and the record is clear and uncontradicted relative to these of Somers' prohibited work activities (See P-19; Tr. 60).⁸

   The process called "bundling", used here by DOL to assess $6,000 in fines for hazardous occupation violations as against five⁹ other employees who used, cleaned or disassembled¹⁰ the same meat slicer as the one on which Cutrona was injured, has been approved, Adm. Wage & Hour Div. V. Thirsty's, Inc., 1997 WL 453588, 5/14/97 DOL Adm. Rev. Bd. This decision reverses the trial decision extensively referenced in Respondents' brief offered in support of their position to the contrary. While Thirsty's involved only hours violations, it is instructive to the extent that the Administrative Review Board found the use of Form WH-266 consistent with the Congressional purpose and regulatory guidelines underlying the Act, and that although the form does not reference each regulatory criterion, its use is a reasonable interpretation and implementation of the regulations issued under the Act. The Form WH-266 was found to be an "...appropriate tool to be used...to recommend penalties through the enumeration and determination of the gravity of factual violations." The adjudicatory process, however, in reviewing the appropriateness of the penalties, is acknowledged in preservation of the due process rights of employers.

   Upon review of the record evidence as a whole, I find the $6,000 per minor fine for hazardous occupation violations, to be appropriate. The DOL association or grouping or like-treating of those (5) minors who used and/or cleaned and/or disassembled the very same machine as did Cutrona, herself injured by her use thereby, is found sensible and reasonable (Tr. 141-2). That these minors were not, in fact, injured when they illegally came in contact with this machine, cannot rationally be viewed as the result of an acceptable risk taken by Respondents, excusable when viewed retrospectively. The good fortune of these minors in not being injured cannot/should not inure to Respondents' benefit. Neither does the fact that only two minors (Curtrona and Martinez) were hired with the intention of Respondents to use the slicer,¹¹ suggest a disassociation of the remaining (4) minors from the higher category of gravity of offense. That Respondents were admittedly aware of the child labor requirements and prohibitions (by reason of their possession of Child Labor Bulletin 101 - Empl' Br. at 19; Tr. 51; 138), and aware that not a small part of its workforce was involved in violations of the Act, neutralizes whatever the intention upon hire, relative to job duties, limited to only two of these minors.

   As for the further increase of these fines by a 1.5 factor, I find such also to be appropriate without reduction under the circumstances of this case (Tr. 148-154). Under 29 C.F.R. 579.5, the various factors to be considered as to amount of penalty include: size of business, gravity of violation, history of violations, willfulness, injury to minors, number of minors illegally employed, and whether the violation is "de minimis"¹² and/or involves "...heedless exposure of any minor to any obvious hazard or detriment to health or well-being...". Assurance of future compliance and an alignment of the penalty amount to the Act's objectives, are also to be considered.

   While some of the minors involved testified that they were instructed not to use the slicing machine (Tr. 322; 356; 377), others testified that Respondent Christensen told employees that 16 was the legal age to operate the slicer (Tr. 262-3), and, although later denied (Tr. 319), that a minor could use the slicer even though one had to be 18 years old to use it (P- 16). Martinez testified that either Christensen or manager Mike Reardon observed her, while she was a minor, using the slicer (Tr. 295-6),¹³ Somers told the DOL investigator that Christensen ("Big Wally" - within the later context of P-19) showed him, while a minor, how to operate the slicer (P-19), and Ferri, while a minor, was shown how to use the slicer by manager Reardon (Tr. 381). Of course, Cutrona, while a minor, was injured¹⁴ when using the slicer (Tr. 256), and upon her return to work she resumed using the slicing machine, as a minor, at first covering her injured thumb hand with a plastic glove "...to make sure the cut itself didn't get wet" (Tr. 261). Martinez admitted that Respondent Christensen made "...specific reference..." to the younger workers that if the health department were to visit the store, they (the minors) should "...immediately get off the slicer." (Tr. 306; P-13). Minors were sometimes left alone and/or in change of the store (Tr. 290; 253-4; P-18).¹⁵

   Mr. Christensen, the owner/operator of Respondent Chrislin Inc. d/b/a Big Wally's, repeatedly suggests that only minors Cutrona and Martinez were given permission to use the slicing machine (Tr. 217), and that the Parlin store, where most of the violations occurred, could have been better managed by him. That is, that because his time was divided between the two locations, his Parlin manager, Reardon, was, unknown to Christensen, letting the operations go downhill (Tr. 200-203; 392-3; 402; 406; 414-16). But, Reardon left Respondents' employ sometime in May, 1996 (Tr. 201; 378), the Matawan store sold in February, 1997 (Tr. 395), and Christensen spent most of his time at the Parlin store after Reardon left, and nearly all his time there after the Matawan store was sold (Tr. 371; 378;9; 383). Christensen was at the Parlin store himself working when Cutrona was injured in April, 1996, (Tr. 242) and thereafter (Tr. 440). Many of the hazardous occupation violations occurred and persisted after Christensen was full-time at the Parlin store (see P-1).¹⁶ To suggest that Christensen was not around much, and that his back was turned, when the majority of the violations occurred and continued, and that the violations took place and continued only because he "...reasonably believed that his managers...would responsibly run the store..." and gave these managers..." too much independence..." (Empl's Br. at 20), is disingenous at best, and certainly not supported in this record. This record evidence more supports an indifference to, and knowing disregard of legal responsibilities under the Act, on the part of Christensen.

   On balance, the circumstances surrounding these violations support a finding of heedless exposure of minors to an obvious hazard, and the continued and persistent occurrence of not inadvertent violations , 29 C.F.R. 579.5(d)(2), and I so find. An inference may reasonably be drawn from all the record evidence that Christensen was aware, or at least should have been aware through the exercise of minimum diligence, that not a few minors employed by him were routinely using and/or cleaning and/or disassembling the slicing machine in violation of the Act. This inference may be reasonably further extended to include Christensen's awareness that not a few minors employed by him were left alone and/or in charge of the store operations, which perforce generated work activities by minors which were prohibited under the Act.

   Nothing surrounding the imposition of the subject penalties suggests an objective other than achieving the purpose of the Act, the deterrence of like conduct, and Respondents' alleged inability to pay the fines cannot serve to reduce the penalties due in light of the circumstances of this case.

   Both Ferri and Flegler noted certain differences between their statements given to the DOL investigator (P-18, P-16), and what actually happened (Tr. 375; 319). As to Ferri, however, there was no inconsistency relative to whether he used the slicer. He did (Tr. 363-5; 369; 375), and was shown by the manager how to use it (Tr. 381-2). So too, with Flegler. He used the slicer (Tr. 318; 325-6; 328), disassembled it (Tr. 326; 330),¹⁷ and agreed that Christensen directed him to disassemble the slicer (Tr. 323-4). The inconsistencies thus do not materially negatively affect the weight and credibility assigned their testimony in principle part.

   I find no merit to, or record support of, Respondents' insistence that the DOL interviews of the minors were in any way forced, coerced or otherwise improper.

   There is some evidence that Cutrona and Martinez left Respondents' employ under less than happy circumstances, and that there existed disagreement between Christensen and these minors relative to the minors' entitlement to unemployment insurance benefits¹⁸ (Tr. 266-9; 302-3; 339-40). However, presuming for argument sake, that the complaints triggering the subject DOL investigation filed by these minors, were motivated by some animus, such motive need not, and here does not, materially negatively affect the credibility of these witnesses relative to the operative facts testified to by them. Indeed, many of these facts testified to were corroborated time and again in this record. I find their testimony, in material part, credible and reliable despite the existence of possible bias as against Respondents.¹⁹

   On the basis of the foregoing, Respondents are found to have violated the Act, and are ORDERED to pay Complainant the sum $56,762.50 representing the penalty assessments as regards minors Dickey ($675), Lebowitz ($675), Cutrona ($10,000), Ferri, Martinez, Somers, Soble and Flegler ($45,000), together with the record keeping fine of $412.50.

      RALPH A. ROMANO
      Administrative Law Judge

Camden, New Jersey

¹ This matter was assigned to the writer on November 30, 1998. The originally set April 7, 1999 hearing was twice continued at the Complainant's request.

² These assessments are comprised of $3,600 in hours violations, $412.50 in record keeping violations, and $62,075 for hazardous occupation violations (total rounded to $66,088). See P-2. References are: "P" for Government exhibits, "D" for Respondent's exhibits, and "Tr." for trial transcript.

³ The use, and/or cleaning and/or disassembling of a slicing machine. Respondents operated sandwich shops at two different locations in the State of New Jersey, Parlin and Matawan.

⁴ The $64,000 figure at P-2, page 2 column 6, line 04. Part D is an incorrect extension of a 1.5 factor over $44,500 (column 5, line 04, Part D). The correct extension is $66,750, which is reduced by a ,925 cap overage for Dickey, and a $2,750 cap overage for Cutrona, for a total reduction of $4,675 from the $70,762.50 total of all assessments, leaving $66,087.50 due.

⁵A DOL process called "bundling", see Tr. 141-4; 162.

⁶ No determination whether the cleaning of an already disassembled cutting blade of a slicing machine is addressed or prohibited by the regulations, is made or implied hereby. This issue is not here presented for resolution.

⁷ At P-2, page 1, line 05, a fine of $2,250 is based upon this alleged and invalidated hazardous occupation violation (Tr. 139). Also, a total fine of $9,000 (included in the $64,000 at P-2, at 2, line 04) is based upon this incorrect allegation (Tr. 142). Because the only fine validated as against Dickey is $675 for hours violations, there exists no longer a ($10,000) cap overage for him, thus the reduction from the $70,762.50 total of all assessments (see ftn. 4, supra) is only Cutrona's $2,750, leaving a total of $56,762.50 of valid assessments (see Order, infra).

⁸ Respondents' argument (Br. At 5-6) that Somers' statement (P-19) is valueless since unsigned, and that because he was not called as a witness, there was a denial of due process as no cross-examination was available, is baseless. The testimony of Somers' DOL interviewer who related what Somers' told him, found credible by the writer, suffices as primary evidence of the violative work activities (Tr. 60). Moreover, 29 C.F.R. 580.7(b) eliminates Respondents' otherwise valid hearsay objection thereto.

⁹ Dickey has been excised from this category, supra.

¹⁰ The record evidence of use and/or cleaning and/or disassembling the slicer as to each of these employees is clear and not refuted, Cutrona (Tr. 248-9); Ferri (Tr. 363); Martinez (Tr. 288-9); Somers (P-19; Tr. 60); Soble (P-22); Flegler (Tr. 318).

¹¹ Respondents apparently admit that their initially argued position-that these minors were exempt from the Act's provisions by reason of their employment "...as part of a state sponsored internship program" - is abandoned as not providing relief from the penalties assessed here (Br. at 9). In any event, such argument is clearly unavailing (see 29 C.F.R. 570.50(b)(c); Tr. 20-27; 155-9).

¹² Respondents concede this factor is inapplicable here (Br. at 21).

¹³ She later testified that Respondent Christensen "...knew [she] was using [the slicer]...because [she] was...the main person there..." (Tr. 298).

¹⁴ Respondents hotly contest whether this injury is a "serious" one so as to warrant the imposition of increased penalties. Cutrona testified that she received nine stitches to her right thumb, and the hospital records bear this out (P-5, at 3, 7). She also testified that she continues to experience numbness at the thumb (Tr. 261). While there is some doubt whether she lost work time due to the injury (Tr. 279; 389-90; D-1), Respondents' suggestion that the injury "...could have been treated with one single stitch..." (Br. at 33) bears no support in this record, and I find no basis whatever, in logic or in law, to consider this injury less than "serious", and I so find.

¹⁵ Noted, is that Christensen knew that the slicer was routinely to be cleaned at the end of the day (Tr. 219), and that minors alone were sometimes left to close the store (Tr. 253; 255; 294).

¹⁶ While there is no direct evidence of the actual dimensions of the Parlin store, considering the employee population at the store, ranging from two up to four at the busiest time of day (Tr. 365-6; 256), and the busiest customer population (5-6) (Tr. 256), and visualizing a

¹⁷ At Tr. 324, Flegler inexplicably denies ever using the slicer, and at Tr. 318, inexplicably denies disassembling it! See ftn. 19 infra.

¹⁸ Evidently, the minors ultimately prevailed on their claims for unemployment benefits (Tr. 269; 302).

¹⁹Indeed, Flegler's relationship to Respondent Christensen (Tr. 189; 329) appears to have tilted his testimony in the opposite direction, favoring Christensen as much as possible (see ftn. 17, supra).