CoA Institute to Appeal Federal Ruling that Children’s Clothing Consignment Volunteers Must be Considered Employees

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Cause of Action Institute today announced it will appeal a ruling by the district court that wrongly found that volunteers at Rhea Lana’s children’s clothing consignment events must be considered employees under the Fair Labor Standards Act.

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The federal government should not attack a business model that provides hardworking families with affordable children’s clothing.

Cause of Action Institute (“CoA Institute”) today announced it will appeal a ruling by the district court that wrongly found that volunteers at Rhea Lana’s children’s clothing consignment events must be considered employees under the Fair Labor Standards Act (“FLSA”).

Cause of Action Institute Vice President Julie Smith: “The district court reached the wrong conclusion in taking an outdated view of a decades-old law intended to protect vulnerable individuals and groups from exploitation. The court freely conceded that Rhea Lana’s labor practices are not designed to exploit anybody. We continue to believe that the Department of Labor has overstepped its authority. The federal government should not attack a business model that provides hardworking families with affordable children’s clothing.”

Rhea Lana Riner: “Individuals should be free to volunteer their time for their own benefit. The Labor Department’s crusade to classify volunteers as employees has put my business and livelihood in jeopardy. If everyone is satisfied, why would the federal government need to intervene?”

Case Background:
Rhea Lana founded her clothing consignment business in her living room more than a decade ago. Since the company’s humble beginnings, Rhea Lana, Inc. has expanded as a franchise with 80 locations across 24 states.

In 2013, the U.S. Department of Labor conducted an audit, and sent Rhea Lana a letter claiming that her company was in violation of the FLSA regarding minimum wages and overtime pay. The government claimed that volunteers who help at the consignment events must be classified as “employees.”

Rhea Lana’s complaint was initially dismissed in 2014 for lack of a reviewable agency action. On appeal, however, the Court of Appeals held that the government’s letter to Rhea Lana was subject to judicial review. Last month, the district court ruled in favor of the government. CoA Institute will represent Rhea Lana in her appeal of the district court’s decision.

Watch a video about Rhea Lana’s story here.

Rhea Lana Inc., et al. v. Department of Labor, No, 14-0017, U.S. District Court for the District of Columbia

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Zachary Kurz
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