Resaler defends no-wage workers

Rhea Lana’s hit with U.S. audit

The U.S. Labor Department is investigating a Conway consignment business’s use of volunteers at its sales.

The department is auditing Rhea Lana’s Inc. to determine if the business is compliant with the Fair Labor Standards Act, said Rhea Lana Riner, the company’s founder and chief executive officer.

The case centers on whether Rhea Lana’s workers should be considered volunteers or employees who should be paid.

Rhea Lana’s, which has franchises in more than 20 states, is a consignment business specializing in children’s clothes, toys, baby equipment and furniture. The items are offered at discount prices at semiannual sales that last four to eight days.

At a Rhea Lana sale, the sellers, called consignors, keep 70 percent of the money they make; 30 percent goes to Rhea Lana’s, Riner said.

“The moms are coming together to work for themselves, so they are just coventuring with us,” she said. “They are not working for us, so they are not our employees.”

The people who help set up the sale and the consignors are given first pick oncethe sale begins, Riner said.

“They are just doing normal garage sale activities,” Riner said. “Putting price tag on things, setting up.”

Juan Rodriguez, spokesman for the Labor Department, would not comment on why the department is investigating Rhea Lana’s, but said the agency is looking at the business’s operations between Jan. 28, 2011, and Jan. 27, 2013.

Rhea Lana’s has no previous history with the department’s Wage and Hour Division, he said in an email.

Riner said the Labor Department is only auditing sales that were in west Little Rock, North Little Rock and Conway.

The Arkansas Department of Labor determined in its investigation into Rhea Lana’s that the company should pay the people who help set upthe sale who are not consignors, said Denise Oxley, general counsel for the department.

“The result of [the investigation] we determined they violated state law in respect to the volunteers,” she said. “We determined the volunteers who were working just to get in early were in fact, employees due minimum wage.”

Oxley said Riner signed a consent agreement in 2012 agreeing to pay those volunteers the state minimum wage, $6.25 a hour.

Riner said the company pays 15 to 20 people who are part of its administrative staff. At the sales, Rhea Lana’s has from 100 to 200 consignors who are not paid, Riner said.

She said the U.S. Labor Department told the company a few weeks ago that the company’s volunteers are employees and should be paid, but Riner disagrees.

Riner has a petition on change.org “asking the Department of Labor to keep consigning the way it is for moms everywhere.”

The petition is addressed to President Barack Obama and members of Arkansas’ congressional delegation. As of Monday, it had about 6,600 supporters.

Members of the delegation sent a letter to the federal Labor Department earlier this month asking for more information about the audit.

“We have asked the Department to work with Rhea Lana’s to ensure they are able to continue their business through the use of consignors,” said U.S. Rep. Tim Griffin, R-Ark.

The Fair Labor Standards Act covers minimum wage and overtime pay in the private sector and in federal, state and local governments. Under the act, “nonexempt” workers must be paid the federal minimum wage of $7.25 an hour.

The act covers employees who have workers involved ininterstate commerce, producing goods for interstate commerce, handling, selling or working on goods that have been moved in or produced for such commerce.

The U.S. department’s website said even those who may not be covered by the act could still be subject to its minimum wage requirements.

Riner said that a Supreme Court ruling concerning the Fair Labor Standards Act says when it is applied, the “economic reality of each situation” needs to be looked at.

“We are to use our common sense to look at the whole work activity,” she said in an email. “The economic reality of our business is that we have moms coming together to use their personal time to benefit their families.”

Business, Pages 19 on 07/30/2013

Upcoming Events