DATE: April 18, 1995
CASE NO. 91-CLA-22
IN THE MATTER OF
MARIA ECHAVESTE,
ADMINISTRATOR,
WAGE AND HOUR DIVISION,
U.S. DEPARTMENT OF LABOR,
PLAINTIFF,
v.
CITY OF WHEAT RIDGE,
COLORADO,
RESPONDENT.
BEFORE: THE SECRETARY OF LABOR
FINAL DECISION AND ORDER
This case is before me for review pursuant to the oppressive
child labor provisions (Sections 12 and 16) of the Fair Labor
Standards Act of 1938, as amended, (FLSA), 29 U.S.C. §§
212, 216(e) (1988), and the implementing regulations at 29 C.F.R.
Parts 570, 579, 580 (1994). The Administrator of the Wage and
Hour Division, U.S. Department of Labor, has appealed from the
Decision and Order (D. and O.) issued by the Administrative Law
Judge (ALJ) on January 25, 1994. The ALJ vacated the civil money
penalty that the Wage and Hour Division assessed against the City
of Wheat Ridge, Colorado, (Respondent or City) for employing
minors under the age of 14 as pool attendants at the city
swimming pool. I agree with the ALJ's ultimate conclusion, but
modify his analysis, as set forth below.
BACKGROUND
The City of Wheat Ridge, Colorado, is a municipality located
in the Denver metropolitan area. The City employs 300-350
employees, about half of whom are temporary employees. The City
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opened a public swimming pool in the summer of 1980. The pool is
open from June through August. The pool has a staff of about 50
seasonal employees, including pool aides who hand out towels and
clothes baskets to pool patrons in an enclosed building away from
the pool area. The pool is open from 12 noon to 7:00 or 8:00 pm.
The pool aides work four-hour shifts each day.
In April 1990 the City personnel department placed a
newspaper advertisement seeking pool aides. The ad sought
students who had completed the seventh or eighth grade. The City
hired 12 minors, under the age of 14, to serve as pool aides.
Among those who responded to the newspaper ad and applied
for the pool aide job was the minor son of Loren Gilbert, then
the Region 8 Regional Administrator for the Wage and Hour
Division. Gilbert testified in deposition that when someone from
the City phoned to inform his son that he had been hired as pool
aide, Gilbert explained to his son that it would be illegal for
him to work at the pool. Gilbert Deposition (GD) at 10. Gilbert
testified that he told his wife to phone and inform the City
personnel department that their son would not report for work
because it would be illegal for him to work there. GD at 10-11.
Gilbert stated that his wife also told the City personnel office
that they should contact the Department of Labor if they had any
questions. Id. Subsequently, Gilbert testified, a woman
did phone him and identified herself as being from the City's
personnel department. Gilbert said he informed the caller that
it was illegal to hire minors under the age of 14. GD at 11-12,
51. Gilbert testified that he did not remember the name of the
caller, and that he did not follow up the phone conversation with
a letter to the City. GD at 51-52.
Patricia Crew, the City personnel assistant, testified that
she was not aware of any telephone contacts between Gilbert and
the City. T. 84. Crew testified that she did receive two or
three anonymous phone calls asking about the hiring of minors
under the age of 14 as pool aides, and that after she received
the first anonymous phone call she requested a legal opinion from
the City Attorney. T. 82-83. Crew received a written legal
opinion from the City Attorney in April 1990 which concluded that
it was permissible under state and federal law to hire minors
under the age of 14 to hand out clothes baskets at the pool
outside of school hours.
Gilbert transmitted a copy of the newspaper advertisement
for the pool aide position to Gerald Hill, District Director of
the Wage and Hour Division, and referred the matter to Hill for
investigation. Hill directed Bonny Crosby, a compliance officer,
to investigate the pool aide matter.
Crosby contacted the City and met with City officials on
June 19, 1990, to discuss the matter. During the meeting, the
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City agreed to comply with child labor requirements. On the
following day, the City terminated the employment of all minors
under the age of 14. The minors were advised that they would be
rehired as pool aides when they reached 14 years of age.
Crosby calculated a civil money penalty of $6,000 -- $500
for each of the 12 minors hired by the City -- for the child
labor violations. In addition, she assessed a $150 penalty for a
record keeping violation -- failure to list the birth date of one
of the minors. Hill reviewed and affirmed the civil money
penalty assessed by Crosby. Hill sent the assessment letter to
the City on July 25, 1990. The City filed an exception on
August 3, 1990, and the matter was referred to the Office of
Administrative Law Judges for hearing. On August 6, 1992, an ALJ
granted summary judgment in favor of the Department of Labor on
the issues of coverage of the FLSA and the City's liability for
violations. A hearing was held before the ALJ on December 3,
1992, and was limited to the issue of the appropriateness of the
assessed civil money penalty.
In the D. and O. issued on January 25, 1994, the ALJ vacated
the civil money penalty. The ALJ concluded that the
Administrator did not properly consider the criteria set forth at
29 C.F.R. § 579.5, for determining the amount of a civil
money penalty. D. and O. at 7. He further stated that the forms
used by the Wage and Hour Division for assessment of penalties
did not permit "the necessary considerations of the particular
circumstances of each violation that the regulations
contemplate." D. and O. at 8.
DISCUSSION
Section 16(e) of the FLSA provides that any person who
violates the provisions of Section 212 (which prohibits
oppressive child labor) shall be subject to a civil money penalty
for each violation. 29 U.S.C. § 216(e).[1] The Department
of Labor's regulations provide, 29 C.F.R. § 579.5(a), that
the determination concerning the amount of the penalty shall take
into consideration the size of the business and the gravity of
the violation. The regulations further state, Section 579.5(b)
and (c), that a number of elements shall be taken into account
when considering the size of business and gravity of violation
criteria.
In addition, the regulations provide, Section 579.5(d), for
further analysis concerning the amount of the penalty, and set
forth two alternatives -- subsections (d)(1) and (d)(2). If
either alternative is satisfied, a lessening of the penalty is
appropriate. Each alternative inquires whether a number of
criteria have been satisfied. With respect to either
alternative, all the listed criteria must be satisfied before the
penalty may be decreased. Keesling v. Supermarkets General
[PAGE 4]
Corp., Case No. 90-CLA-0034, Sec. Dec., Jan. 13, 1993, slip
op. at 4.
In this case, the ALJ utilized the analytical format set
forth in the regulations and, indeed, reached the proper result
when he concluded that the civil money penalty should be vacated.
I can not, however, accept in its entirety the ALJ's analysis of
the regulatory criteria as they apply to the facts of this case.
Therefore, I will explain where I have determined that the ALJ
erred, and set forth my reasons for concluding that it is
appropriate to vacate the civil money penalty in the
circumstances here presented.
The regulations stipulate that the size of the business and
the gravity of the violation shall be considered in determining
the amount of the penalty. With respect to the size of business
criterion, the ALJ noted that the City employed 300-350 workers,
and that about 50 seasonal workers were employed at the pool. D.
and O. at 8. He also noted Crew's testimony that the pool did
not make a profit. The funds to operate the pool came from
admission fees, and were supplemented by monies from the City's
general fund that consists primarily of tax revenue. Id.
The ALJ grappled with the difficulty of applying the size of
business factors to a public entity [2] by concluding that "the
fact that any civil money penalty would be paid with taxpayers'
money, rather than from 'profits,' is a relevant consideration."
Id.
The fact that a penalty would be paid from tax revenue is
not necessarily a relevant consideration for determining the size
of a civil money penalty. A far more pertinent consideration is
whether the public entity is big enough to have sufficient
financial and staff resources to provide that entity with access
to information on child labor requirements. See testimony of
Hill. T. at 34. The record in this case shows that the City of
Wheat Ridge did have resources available to obtain information on
child labor restrictions, since the head of the City's personnel
department sought and obtained legal advice from the City
Attorney on the permissibility of hiring minors under the age of
14 as pool aides. Unfortunately, the legal advice provided to
the personnel department was incorrect, and the City proceeded
with the hiring of the underage children.
With respect to the gravity of the violation, the ALJ
correctly observed that the City had no prior violations, and was
not the subject of any previous child labor investigation. It
was also proper for the ALJ to note that the pool aides were not
exposed to any hazards and received no injuries; that the pool
aides worked during the summer, when school was not in session;
and that they worked during daylight hours and only for four-hour
periods. I would add that the duration of the violation was
brief. Thus, although the pool aides may have been hired in
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April, the record shows that the pool was open June through
August, and that the City fired the underage pool aides the day
after the June 19, 1990, meeting between City officials and the
Wage and Hour Division's compliance officer. Accordingly, the
underage pool aides' actual employment at the pool site lasted 2-
3 weeks, at most. All these factors point to the conclusion that
this case does not involve egregious violations.
Section 579.5(c) provides that among the factors to be
considered in evaluating the gravity of the violation is whether
there was any evidence of willfulness or failure to take
reasonable precautions to avoid violations. In evaluating this
factor, the ALJ credited the testimony of Crew, the City's
personnel director, that she had no personal knowledge of a
telephone call to or from Gilbert regarding the employment of
minors under the age of 14 as pool aides. D. and O. at 9, 10.
Both Gilbert and Hill, on the other hand, testified that a
critical aspect of the decision to assess a civil money penalty
against the City, [3] was that the City went ahead and hired
minors under the age of 14 after Gilbert had informed them that
it was illegal.
The ALJ credited the testimony of Crew, and I have no basis
for overturning the ALJ's credibility resolution on this point.
On the other hand, the ALJ did not specifically discredit the
deposition testimony of Gilbert, and I have no basis for
disbelieving Gilbert's testimony that he received a phone call
from someone who represented herself as being from the City's
personnel department, and that he informed the caller that it was
illegal to employ minors under the age of 14 as pool aides.
However, Gilbert did not remember the name of the caller, and he
did not follow up the phone call with a letter to the City.
Thus, it is not possible to be certain, on the basis of the
record evidence, whether the caller was from the City personnel
department, and whether the advice that Gilbert gave the caller
ever reached City officials with responsibility for hiring the
pool aides. Accordingly, I conclude that the record evidence
does not demonstrate willfulness on the part of the City, nor
does it demonstrate a failure to take reasonable precautions to
avoid violations.
In short, the unique circumstances of this case, when
considered in light of the gravity of violation criterion, lead
to the conclusion that the violations in this case were not
severe, were not willful, and are not likely to recur.
In addition to the size of business and gravity of violation
criteria set forth in the regulations at 29 C.F.R. §
579.5(a)-(c), the regulations 29 C.F.R. § 579.5(d), set
forth two alternatives for further consideration. If either
alternative is satisfied, a reduction of the penalty is
appropriate. The first
[PAGE 6]
criterion under subsection (d)(1) calls for a determination
whether the violation is de minimis. The ALJ in this case
found that this criterion was satisfied, stating that "given the
particular facts of this matter, the unlawful employment of 12
minors below the age of 14 and the single record-keeping
violation does not in and of itself bootstrap this violation to
something greater than 'de minimis.'" This case does
involve the employment of 12 underage children -- a notable
percentage of the complement of approximately 50 seasonal pool
employees. On the other hand, the violations involved only a
single job classification, and the duration of the underage pool
aides' employment was very short.
I need not resolve, however, whether the facts of this case
satisfy the de minimis criterion in subsection (d)(1),
because I have determined that the circumstances of this case
satisfy all the criteria set forth in subsection (d)(2). That
regulatory provision allows for the reduction of a civil money
penalty based upon the following analysis:
Whether the evidence shows that the person so charged
had no previous history of child labor violations, that
the violations themselves involved no intentional or
heedless exposure of any minor or any obvious hazard or
detriment to health or well-being and were inadvertent,
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.
As discussed earlier in connection with the gravity of the
violation criterion, the record evidence does not show a previous
history of child labor violations; the underage pool aides were
not exposed to hazard or danger; none of the pool aides were
injured; and the City has given credible assurances of future
compliance.
Furthermore, given the testimony of the City's personnel
director, credited by the ALJ, that she had no personal knowledge
of a telephone call to or from Gilbert advising the City that the
employment of minors under the age of 14 as pool aides was
illegal, I accept the ALJ's determination that the violations
were inadvertent. Finally, subsection (d)(2) requires a
determination whether a civil penalty is necessary to achieve the
objectives of the FLSA. This case presents a set of very unique
circumstances -- in particular, the lack of prior history of
child labor violations; the immediate steps to achieve full
compliance when the Wage and Hour compliance officer informed the
City of the violations; the very brief duration of employment of
the underage pool aides at the pool site; the absence of danger
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or injury to the pool aides; and the apparent inadvertent nature
of the violations. In light of all the circumstances presented
here, I conclude that a civil money penalty is not necessary to
achieve the objective of the City's compliance with the child
labor provisions of the FLSA. Accordingly, I affirm the ALJ's
order vacating the civil money penalty.
SO ORDERED.
Secretary of Labor
Washington, D.C.
[ENDNOTES]
[1] During the period relevant to this case, Section 16(e)
provided for a penalty not to exceed ,000 for each violation.
Section 16(e) was amended by the Omnibus Reconciliation Act of
1990 to raise the maximum civil money penalty from ,000 to
$10,000, effective November 5, 1990. Pub. L. No. 101-508, 104
Stat. 1388-89 (1990).
[2] Section 579.5(b) lists the factors to be considered in
evaluating the size of business criterion: the number of
employees, the dollar volume of sales or business done, the
amount of capital investment and financial resources, and "such
other information as may be available relative to the size of the
business . . . ."
[3] Hill testified (T. at 22):
It's my understanding that Lauren Gilbert had informed
the City of Wheat Ridge, prior to the hiring of these
minors, that it was not permitted by the Federal law.
They went ahead and hired them anyway. And, that's why
I felt that a civil money penalty was appropriate in
this case.
Gilbert testified (GD at 50) that the legal advice the City
received from the City Attorney was not considered to be an
extenuating circumstance in assessing the penalty because:
I told them in April that they were violating the law.
No matter who gave them that advice, it was wrong and
it was illegal, and they continued to do so until June.
