Today’s Wall Street Journal featured a story by Rhea Lana Riner. Mrs. Riner founded Rhea Lana’s in 1997. It is a consignment company for secondhand children’s clothes. The company began in her living room and soon expanded. In 2008, the company converted to a franchise model and now has 80 locations across 24 states.
The article at The Wall Street Journal explains what has happened to the business in the past two years:
Rhea Lana’s operations are similar to more than a thousand other consignment event businesses in the country. Our locations host two sales a year, each running two to eight days. Before a sale, consignors list their clothes and toys on our website, along with their asking prices. On the day of the event, they bring the items to the location and set them up for display. Consignors keep 70% of the proceeds.
They can also volunteer before and during the event—doing everything from setting up display racks, to checking out customers, to helping buyers carry heavy purchases to their cars. As a perk, volunteers are allowed to shop before the general public, and they are sometimes given preferential treatment on display locations for their own items.
But such mutually beneficial exchange is apparently a foreign concept to the federal government. In January 2013 the Labor Department audited our employment practices. Four months later the bureaucracy concluded that our volunteers are actually “employees.” As such, we were told that we were in violation of Sections 6 and 7 of the Fair Labor Standards Act regarding minimum wages and overtime pay. I was told this during a face-to-face meeting, without any accompanying written complaint or advance notice of allegations.
This is a business that helps mothers buy beautiful clothes for their children at reasonable prices. The business model includes volunteers. These volunteers are in no way coerced into volunteering–they are people who want to help who may not be able to commit to the regular hours of a job.
The article further explains:
The case raises questions about what it means to volunteer in the 21st-century economy. Some—including, apparently, the Labor Department—believe it is illegal for a private business to receive an ounce of help without providing financial compensation. But as our business model shows, there are situations in which volunteering is mutually beneficial, even without money changing hands. Besides, if someone wants to spend a weekend helping families find affordable clothes and toys, why on earth would the federal government stop them?
If a friend of mine opens a store and I volunteer to paint the walls for him, am I breaking a law? This is clearly an example of government overreach. Hopefully the courts will eventually decide this in the right way, but it is a shame that the government has chosen to harass Mrs. Riner for her efforts to help make children’s clothes more affordable.