DATE: April 3, 1995
CASE NO. 90-CLA-35
IN THE MATTER OF
ADMINISTRATOR, WAGE AND HOUR DIVISION,
EMPLOYMENT STANDARDS ADMINISTRATION,
UNITED STATES DEPARTMENT OF LABOR,
PLAINTIFF,
v.
D. D. & D., INC., D/B/A
SIZZLER FAMILY STEAKHOUSE,
RESPONDENT.
BEFORE: THE SECRETARY OF LABOR
FINAL DECISION AND ORDER
The captioned 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 and 216(e)(1988), and the implementing
regulations. 29 C.F.R. Parts 579 and 580 (1994). The portion of
the decision of the Administrative Law Judge (ALJ) that
eliminated the penalty assessed by the Wage-Hour Administrator
with regard to the Hazardous Occupation violations is reversed
and the total amount of penalty is modified.
BACKGROUND
The Wage and Hour Division ("Wage and Hour") conducted an
investigation of Respondent in March 1990, under the child labor
provisions of the FLSA. Based on the investigative findings,
Wage and Hour assessed civil money penalties (CMP) in the amount
of $12,350 for 41 violations, involving 32 minors. Respondent
filed exceptions to the penalty assessments and a hearing was
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held before an ALJ on July 29, 1990.
At the hearing, the Acting Administrator ("Administrator")
alleged that Respondent had employed 29 minors in violation of
the times and hours prohibitions of Child Labor Regulation 3
("Reg. 3"), 29 C.F.R. § 570.35. The Administrator alleged
that Respondent allowed 14 or 15 year olds to work past 7:00 P.M.
on school days; more than three hours in any one day when school
was in session; more than 18 hours per week in weeks when school
was in session; and past 9:00 P.M. during the summer.
The Administrator also alleged that one minor, under the age
of 16, was permitted to cook in the kitchen in violation of 29
C.F.R. § 570.34(b)(5), a Reg. 3 occupation restriction. The
Administrator further charged that Respondent allowed 5 minors
age 16 or 17 to either use, disassemble, clean and/or reassemble
the restaurant's power-driven meat slicer, a violation of 29
C.F.R. § 570.61, also known as Hazardous Occupations Order
No. 10 ("HO 10"). Finally, the Administrator alleged that
Respondent permitted 6 children under the age of 16 to handle the
power-driven meat slicer, a violation of Reg. 3's incorporation
of H.O. 10 (29 C.F.R. § 570.33(e)) and a violation of Reg.
3's specific prohibition against the use of power-driven slicers
(29 C.F.R.
§ 570.34(b)(6). The Wage and Hour Division used its form WH-266 as a
guideline for assessing the penalties. The form lists 20 types
of child labor related violations and a recommended civil money
penalty for each. The breakdown of the recommended penalties for
Respondent was as follows:
CMPX NO.
MINORSTOTALCMPS
Reg. 3 Hours Violations (15 yrs.) 150 25 $3750
Reg. 3 Hours Violations (14 yrs.) 200 4 800
Reg. 3 Occupations (14 yrs.) 400 1 400
HO (17 yrs.) 500 1 500
HO (16 yrs.) 600 4 2400
HO (under 16 yrs.) 750 6 4500
____ ___ _____
Total 41 $12,350.
The ALJ affirmed the Administrator's finding with regard to the
violations. However, he concluded that a "less vigorous" penalty
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would still achieve the objective of the child labor provisions
of the FLSA and reduced the penalty by $5,000.00, to $7,350.00.
The Administrator appealed the decision, seeking to have the full
amount of recommended penalties reinstated. Respondent filed a
Statement in Opposition and the Administrator filed a Reply
Statement.
DISCUSSION
A. Standard of Review
Respondent's Statement in Opposition to the Administrator's
Petition for Review notes that 29 C.F.R. § 580.13 is silent
as to the appropriate standard of review of an ALJ's decision.
Respondent urges that the review should be limited to a decision
of whether the ALJ acted within the bounds of his discretion,
rather than a denovo finding by the Secretary of
the appropriate amount of penalties.
Section 16(e) of the FLSA requires that the administrative
hearings in these cases be conducted in accordance with Section
554 of the Administrative Procedure Act ("APA"). 5 U.S.C. §
554 (1988). See 29 U.S.C. § 216(e). Section 557(b)
states, in pertinent part, that "[o]n appeal from or review of
the initial decision, the agency has all the powers which it
would have in making the initial decision except as it may limit
the issues on notice or by rule." 5 U.S.C. § 557(b). Thus,
it is clear that I have the authority to review the record under
a denovo standard. See Mester Manufacturing
Co. v. U.S. Immigration & Naturalization Service, 900
F.2d 201, 203-204 (9th Cir. 1990). However, where an ALJ's
findings of fact are supported by ample evidence, I will adopt
those findings. SeeDarryl Seal v. The American
Inspection Co., Case No. 92-ERA-6, Sec. Amend. Dec., March
24, 1995, slip op. at 1. (Under Energy Reorganization Act)
B. Child Labor Violations and Appropriateness of
Penalties
Section 570.35 of the regulations essentially provides that
employment of minors under the age of sixteen shall be confined
to the following periods: (1) outside school hours; (2) not more
than 40 hours in any 1 week when school is not in session;
(3) not more than 18 hours in any 1 week when school is in
session; (4) not more than eight hours in any 1 day when school
is not in session; (5) not more than 3 hours in any 1 day when
school is in session; and (6) between 7 a.m. and 7 p.m. in any 1
day, except during the summer (June 1 through Labor Day) when the
evening hour will be 9 p.m.
The parties stipulated that from January 1988 through March
1990, Respondent employed twenty-nine employees below the age of
sixteen in excess of the times and hours allowed under §
570.35. The ALJ found that Respondent was liable for the twenty-
nine separate violations as charged, thus affirming the $4,950.00
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recommended penalty. Decision and Order (D. and O.) at 4. The
ALJ also agreed with the Administrator's charge that one 14 year
old employee worked as a cook, in violation of §570.34 and
agreed that the $400 recommended penalty was appropriate.
Id.
The Administrator raises two issues in her petition for
review, as follows:
1) Whether the ALJ erred by relieving D.D. & D., Inc. of
all civil money penalties for violations of Hazardous Occupations
Order 10 of the child labor regulations (29 C.F.R. § 570.61)
which it committed by allowing children 16 or 17 years of age to
operate a power-driven meat slicer.
2) Whether the ALJ erred by recategorizing violations of
the child labor regulations, which D.D. & D., Inc. committed by
allowing children 14 or 15 years of age to operate a power-driven
meat slicer, as Child Labor Regulation 3 occupation violations
(rather than Hazardous Order violations) and thereby reducing the
amount of the civil money penalties assessed for those
violations.
Regarding the first issue, the ALJ discussed the
applicability of HO 10 to meat slicers in restaurants as opposed
to meat processing plants. Respondent had argued that HO 10
applies only to slaughtering or meatpacking establishments.
The ALJ noted the Administrator's acknowledgement that there
is a split of opinion among ALJ's as to HO 10's applicability to
restaurants. The ALJ ultimately agreed with the Secretary's
position, which was upheld in a federal district court, that HO
10 does, indeed, apply to restaurants. See Dole v. Stanek,
Inc., 116 Lab. Cas. (CCH) ¶ 35,372 (N.D. Iowa 1990).
The ALJ was unequivocal in his finding, stating that "[o]n the
basis of the Secretary's argument, the court decision, and a
review of the order, those who found that HO 10 applies to
Respondent's business and to work involving the slicer are joined
here." D. and O. at 6. Paradoxically, the ALJ then proceeded to
absolve the Respondent from all penalties assessed for HO 10
violations:
Therefore, notwithstanding the finding that H.O.
10 applies to the Respondent, owing to the split
in opinions and uncertainty concerning its
application, it is believed that the penalties
based on its violations would be unfair at this
time. Accordingly, the Respondent is, hereby, excused
from paying $2,900.00 assessed because one
minorseventeen years of age and four minors
sixteen years of age cleaned or operated the power
slicer.
Id. at 10.
The ALJ also reduced the penalties from $4,500.00 to
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$2,100.00 for the six minors under 16 years of age who operated
or handled the meat slicer, citing the same split in opinions and
because HO 10 makes no reference to employees under age sixteen.
I reject the ALJ's basis for the reduction in CMPs,
i.e., "owing to the split in opinions and uncertainty
concerning its application," as inappropriate since my position
is clear -- HO 10 is applicable to restaurants. Accordingly, I
find that the ALJ erred by relieving Respondent of all CMPs for
violations of HO 10 which it committed by allowing children 16 or
17 years of age to operate or handle a power-driven meat slicer.
I also find that the ALJ erred by recategorizing violations from
HO 10 to Reg. 3, as a basis for reducing the penalty. Section
570.33(e) expressly provides that those occupations prohibited
with respect to minors between 16 and 18 years of age under the
HO's, are also prohibited with regard to those under 16. It
logically follows that exposing minors under 16 to the risks of
operating or handling the meat slicer justifies a higher penalty
than that assessed for exposing minors in the 16 or 17 age group.
A review of the record does, however, reveal a valid basis
for reducing the CMPs in accordance with the regulations.
Section 579.5 provides that in assessing whether a penalty is appropriate and, if so, the amount of the penalty, the following
criteria should be considered:
(b) in determining the amount of such penalty
there shall be considered the appropriateness of
such penalty to the size of the business . . .
taking into account the number of employees
employed . . . dollar volume of sales or business
done, amount of capital investment and financial
resources . . .
(c) in determining the amount of such penalty
there shall be considered the appropriateness of
such penalty to the gravity of the violation or
violations, taking into account, among other
things, 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 so employed and records of the required
proof of age; the occupations in which the minors
were so employed; 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.
(d) Based on all the evidence available, including
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the investigation history . . . and the degree of willfulness
involved in the violation, 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 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 to 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.
The Administrator indicates a tacit agreement with the ALJ's
conclusion that a less "rigorous penalty will still achieve the
objective of the child labor provisions of the Fair Labor
Standards Act", D. and O. at 9, and acknowledges that the ALJ did
give due consideration to the circumstances and could have
reduced the penalties short of relieving Respondent of all
the HO penalties. Administrator's Statement at 20.
In her petition, the Administrator states that the
objections raised relate more to the proper application and
interpretation of the regulations than the total amount of the
penalties.
In taking this appeal, the Administrator
recognizes that this case does not present the
most egregious violator. The Administrator is
fully aware that D.D. and D.'s president and
owner, Brunmeir, cooperated with the investigation
and made no attempt to conceal the violations. In
addition, it is acknowledged that the firm has no
prior history of child labor infractions.
Furthermore, the Administrator does not dispute
the ALJ's determination that Brunmeir's assurance
at the hearing of the firm's future compliance is
a credible one. Finally, the Administrator also
realizes that the amount of money at issue,
i.e., $5,000, is relatively small.
Nevertheless, the Administrator has appealed the
ALJ's decision because, in her view, it is
important to establish the proper application and
interpretation of the regulations at issue for
purposes of future child
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labor enforcement.
Administrator's Statement at 16. Thus, a reduced penalty will
not jeopardize Wage and Hour's position regarding the application
of child labor penalties, especially those involving hazardous
occupations.
I find that such factors as, Respondent's cooperation
with the investigation, the lack of prior violations, the fact
that no minors suffered injuries, and Respondent's credible
assurance of future compliance, support a reduction in the
original assessment of penalties. CONCLUSION
Accordingly, I find that the ALJ erred in relieving
Respondent of all HO penalties and recategorizing HO violations.
The full amount of the CMPs is to be reinstated with a 40%
reduction of the originally assessed penalties.
Respondent is liable for the payment of a modified penalty
in the amount of $7,410.00 (seven thousand four hundred and ten
dollars).
SO ORDERED.
__________________________
Secretary of Labor
Washington, D.C.
