- Reiterating its commitment to combatting oppressive child labor, the DOL will “[use] all appropriate enforcement tools, including the hot goods provision of section 212(a)” to curtail child labor violations.
- The FLSA defines “hot goods” broadly to include any goods produced in or about an establishment in the United States where an oppressive child labor violation has occurred. Notably, a minor worker need not be actually engaging with the good for it to be deemed a “hot good.”
- Companies are enjoined from shipping or otherwise facilitating the transfer of hot goods, and the prohibition applies to downstream purchasers.
On August 31, 2023, the U.S. Department of Labor’s Wage and Hour Division issued Field Assistance Bulletin No. 2023-3 (FAB) to provide guidance to field staff on the prohibition against the shipment of “hot goods,” found in Section 212(a) of the Fair Labor Standards Act (FLSA),1 and how the provision can be used as an enforcement tool for child labor violations.
The FAB starts with an overview of the “hot goods” provision, which prohibits the shipment or delivery for shipment of hot goods in interstate commerce, and any downstream shipment, if the goods were removed from the producing establishment within 30 days following a child labor violation.
What is a “Hot Good”?
A “hot good” is defined as a good that was produced in an establishment in or about which oppressive child labor occurred. Each of the highlighted terms is defined broadly:
- “Goods” include “wares, products, commodities, merchandise, or articles or subjects of commerce of any character, or any part or ingredient thereof . . .” including things like goods, clothing, machinery, printed materials, and even intangibles such as ideas, intelligence, and news.2
The FAB recognizes that when a hot good is incorporated as a component of a new product, and when hot goods are comingled with other goods, all the goods are considered hot. For example, a component button produced at a factory with child labor violations is a hot good, and when added to a shirt, the entire shirt becomes a hot good. Another example is when pants produced at a factory where child labor violations occurred are stored at a third-party distributor’s warehouse and mixed with pants from other factories, all the pants will be considered hot goods.
- “Oppressive Child Labor” includes any violation of the DOL’s Child Labor Regulations and Orders (codified in 29 C.F.R. Part 570).
- “Produced” means “production, manufacturing, mining, or handling of goods,” and includes handling, sorting, storing, packing, and labeling of goods that have already been manufactured.3
- “In or About an Establishment”: A minor is employed “in” an establishment in the United States when they perform at least some occupational duties on the premises, regardless of whether they are employed by the owner of the establishment. The FAB notes this does not include a minor who visits an establishment only for short periods of time or for the sole purpose of picking up or delivering “messages or small packages,” and who is not employed by the owner of the establishment.4
A minor is employed “about” an establishment if they performed work duties close in proximity to the establishment, and their work duties are directly related to the activities of the producing establishment. The FAB provides the example that a minor who regularly loads product onto a truck outside the factory where products are produced is considered to be employed “in or about” such establishment.5
An “establishment” is a physical place where goods are produced, and it can extend over an area of several miles in certain cases, though it need not have a permanently fixed location.For example, a fishing boat may be considered an establishment under the hot goods provision, despite not having a set location.6
The FAB points out that if an oppressive child labor violation is occurring in or about an establishment, then the products produced at the establishment are “hot” regardless of whether the child labor was directly working on the goods themselves.
Additionally, unlike other provisions of the FLSA, Section 212(a) does not require a minor be covered on an individual or enterprise basis.
Prohibition Against Shipment or Delivery of Hot Goods and the 30-Day Rule
Section 212(a) prohibits the shipment or delivery for shipment of hot goods in commerce within the United States. This means that goods removed from an establishment within 30 days of the last occurrence of a child labor violation are “hot” upon their removal and while in the supply chain and are barred from further downstream shipment. The hot goods remain hot until they come to rest with the final consumer.
This prohibition includes physically transporting the hot goods, coordinating a third party to transfer them, or otherwise giving the hot goods to a distributor with the knowledge that another party will subsequently ship the goods.7
Good-Faith Defense
Section 212(a) provides a good-faith defense for purchasers of hot goods who acquire the goods in good faith, and in reliance on written assurances that the specific goods were produced in compliance with the FLSA child labor provisions.
A purchaser cannot rely on this defense if their reliance was not in good faith (i.e., they had reasons to know the assurances were inaccurate, or knew about past child labor violations and took no actions to assure present compliance), if the purchaser acquired the goods after learning of a child labor violation, or if the assurances were not specific and memorialized in writing.
The FAB clarifies that a general stipulation in a purchase order stating that the sale of goods constitutes a guarantee of compliance with the FLSA is not enough.8 The guarantee must be a separate written assurance from the producer as to the specific goods at issue provided prior to the purchase of the goods.
The FAB also notes that written assurances as to the production of goods in the future do not qualify for the good-faith defense.9
Enforcement and Remedies
The WHD has the authority to investigate and make findings that oppressive child labor violations have occurred, and that goods are “hot” in violation of Section 212(a). If such a finding is made, the WHD may request that a producer, manufacturer, or dealer voluntarily refrain from shipping the goods until the child labor violation has been remedied.
If a company does not voluntarily withhold from shipment, the WHD has the authority to file a civil action in federal court to enjoin the shipment of goods via a temporary restraining order, temporary injunction, or permanent injunction. To ensure compliance through the supply chain, the WHD also has the authority to compel downstream businesses that are in possession of the goods to stop shipment.
The WHD can also assess money penalties and enhanced compliance terms to ensure compliance.
Recommendation for Employers
The FAB provides several examples to help illustrate the application of the “hot goods” provision. The following example demonstrates just how challenging it can be for employers to comply:
Imagine a minor who is engaged by a landscaping company and is sent to perform landscaping work at a clothing company’s factory where goods are produced and shipped in interstate commerce. As part of their landscaping job, the minor uses a power-driven saw to cut wood in violation of a hazardous occupation order, constituting “oppressive child labor.” Even though the minor is not producing any clothing in the factory and is not employed by an employer engaged in commerce or the production of goods, Section 212(a) may still apply because oppressive child labor occurred in or about the establishment where goods were produced. As a result of the landscaping company’s utilization of oppressive child labor, any goods produced at the clothing factory within 30 days of the violation are “hot,” and cannot be shipped.
This example helps illustrate the reach of the “hot goods” provision, and how minor workers outside of a business’ own workforce, including minor labor used by supply chain partners and contractors, can impact operations.
While the FLSA’s “hot goods” provision addresses child labor in the United States, employers should keep in mind that child labor, which is a key feature of internationally recognized human rights,10 can occur in any country. Therefore, in addition to complying with local laws such as the FLSA’s “hot goods” provision, employers must also be mindful of international standards on child labor and engage in the necessary human rights due diligence.
Employers with questions as to how to meet these compliance challenges should consult with employment counsel.
Footnotes
1 Section 212(a) specifically states: “No producer, manufacturer, or dealer shall ship or deliver for shipment in commerce any goods produced in an establishment situated in the United States in or about which within thirty days prior to the removal of such goods therefrom any oppressive child labor has been employed . . .” See 29 U.S.C. § 212(a). Note, there are similar “hot goods” provisions found in Section 15(a)(1) and 12(a) of the FLSA, that prohibit the shipment of goods in interstate commerce that were produced in violation of the minimum wage and overtime requirements of the FLSA.
2 See 29 U.S.C. § 203(i); 29 C.F.R. § 570.107.
3 See 29 U.S.C. § 203(j); 29 C.F.R. § 570.108.
4 See 29 C.F.R. § 570.110.
5 Id.
6 See 29 C.F.R. § 570.109.
7 See 29 C.F.R. §§ 570.105, 570.106.
8 See 29 C.F.R. §§ 789.2.
9 See 29 C.F.R. §§ 789.3.
10 The prohibition against child labor is enshrined in two International Labour Organisation (ILO) Conventions, Convention No.138 on Minimum Age and Convention No. 182 on the Worst Forms of Child Labour. These Conventions are known as “fundamental” ILO Conventions, meaning that ILO member States (including the United States) are obliged to “respect, promote and realize the abolition of child labour, even if they have not ratified the Conventions in question.” https://www.ilo.org/ipec/facts/WorstFormsofChildLabour/lang--en/index.htm
