The U.S. Department of Labor (“DOL”) Wage and Hour inspectors are showing prolific use of “hot goods” orders to prohibit the shipment of goods allegedly produced in violation of minimum wage, overtime pay or child labor laws. Recent media attention has been drawn to substantive due process concerns from manufacturers, shippers, contractors and related industry groups regarding the DOL’s increased use of “hot goods” orders during the investigative audit stage1. Some industry groups have charged that the DOL is engaging in “bullying tactics,2” leaving businesses with no option, other than to consent to the demands of the DOL in order to remove “hot goods” orders before perishable goods expire.
As “hot goods” provisions affect the manufacturer, the shop making the goods, as well as the shipper who owns the goods, it is important for product manufacturers, producers, shippers, and businesses outsourcing the production of goods or components to others to properly classify workers regarding overtime exemptions, maintain accurate time records, train supervisors regarding wage and hour compliance and use contractual language certifying compliance with the Fair Labor Standards Act (“FLSA”) to lessen the risk of being issued a “hot goods” order.
“Hot Goods” Language:
“Hot Goods” are pieces alleged by the DOL to be made in violation of the Federal minimum wage or overtime requirements. The FLSA has two provisions that prohibit the shipment of these goods into commerce:
(1) Section 15(a)(1), prohibiting shipment of “hot goods”: If it is asserted that minimum wage or overtime is not being paid to employees, the DOL can object to the shipment of “hot goods” and require the contractor or manufacturer to take corrective action before it lifts its objections and allows the goods to be shipped. These corrective actions normally include entry into a Consent Decree to resolve any wage liabilities, with a plan from the manufacturer regarding future compliance with the FLSA. The DOL may also initiate a “monitoring” program to curtail future violations.
(2) Section 12(a), forbidding shipment of goods produced at establishments using prohibited youth labor: When a youth employment violation occurs at a shop, goods may not be removed from that shop for thirty days. Civil money penalties are also typically required.
Neither present compliance with the FLSA, nor a lack of knowledge that goods were produced in violation of the FLSA’s minimum wage and overtime provisions shields a defendant from injunctive relief3. Hot goods orders may be lifted only on the business’ agreement to rectify any alleged violations4.
An example of a “hot goods” action receiving a great deal of press coverage occurred last summer, when “hot goods” orders were issued to various blueberry farmers in the state of Oregon prohibiting the production or shipment of harvested blueberries based on the DOL’s determination that recordkeeping and minimum wage violations occurred. Forced to quickly reach an agreement and keep shipments moving before the blueberries spoiled, the farmers agreed to pay almost $240,000 in fines and back wages for alleged minimum wage violations.
In addition to the suggestion in the preamble to this article that employers engage in steps to train supervisors regarding FLSA compliance and to classify exempt employees properly, it is also important to insist on contractual assurance from contractors and shippers that they are in compliance with the FLSA. This is because section 215(a)(1) of the FLSA provides a “safe harbor” exemption to “innocent” purchasers or shippers able to establish a good faith reliance on written assurance from the producer that the goods were produced in compliance from the FLSA.
To support an assurance of “good faith,” purchasers and shippers are advised to insert a clause into their procurement contracts reading that the signor of the contract certifies that, in the execution of the work described in the contract, he/she will comply with all provisions of sections 6, 7 and 12 of the FLSA, and that there will be no violation of “hot goods” or “hot cargo” provisions involving the unlawful use of underaged employees. This clause will not guarantee the non-applicability of “hot goods” rules, particularly if the purchaser knows or should have known, of FLSA violations. However, the language provides some affirmation of compliance useful in asserting the “innocent purchaser” safe-harbor exemptions.
This article was authored by Robin Repass of Jackson Kelly PLLC. For more information on the author, click here.
 See, e.g., Eric Mortenson, Farm Bureau and State Officials Blast “Heavy Handed” Federal Labor Investigations, August 29, 2012, The Oregonian.
 Chao v. Ladies Apparel Group, Ltd., 2002 U.S. Dist. LEXIS 10078 *11 (S.D.N.Y. 2002).
 Brock v. Rusco Industries, Inc., 842 F.2d 270, 272 (11th Cir. 1988).