MIKE MASTERSON: Rhea Lana’s to court

Posted: September 1, 2018 at 1 a.m.

The Conway mother of three who launched a children’s clothing consignment shop in her home years ago continues to be hounded by a U.S. Department of Labor that threatens her with enormous fines for violations that make no sense to most rational Americans.

Rhea Lana Riner’s struggles with the unreasonable federal bureaucrats began well before she sued the department in 2014. I join many Americans in believing she rightfully allows volunteers to work in her shops simply to have first dibs at purchasing incoming used clothing, a franchising concept now spread across America.

It’s common sense that volunteers are in no way considered actual employees, as the department has claimed.

Think about it logically. If someone volunteers to trim your trees in exchange for being able to purchase the biggest ones for firewood before others can, are they really your employee?

The harassment began in 2013 under Barack Obama’s activist Labor Department and led to threats of million-dollar penalties, she says.

“I organized my first consignment event in 1997 with just 11 consignors and three racks of clothing in my living room in Conway,” she explains. “I wrote all the tags by hand and rewashed and ironed many of the clothes. From those humble beginnings, we have had remarkable success. Yet in 2013, the Department of Labor (DOL) took it upon itself to go after my business, initiating an investigation into our employment practices.”

A few months later, Labor officials came to Riner’s door to insist the consignors/volunteers (those who chose to help at the event) constituted “employees” under the Fair Labor Standards Act. Consequently, they had to be paid the minimum wage. “The DOL also threatened my business with significant financial penalties.”

And from there, the ordeal has continued through today when, after a long and winding legal path, the Arkansas entrepreneur at long last will have her day in court with oral arguments set for Sept. 21 in a Washington, D.C., federal courtroom.

She launched her consignment concept 20 years ago, hoping to help young families stretch their children’s clothing budgets. Her creative model involves organizing consignment events that today have multiplied to more than 80 locations across 21 states.

Rhea Lana’s Inc. allows those who consign and sell their own items to also volunteer to work at the events, she said. “As a perk they get to shop earlier than the public, using the money they made from selling items to purchase new ones. This business model was reviewed and approved by the State of Arkansas in 2012.”

Then enter the closed fist of government bureaucracy and the Department of Labor’s insistence that volunteers had to be considered employees. She naturally disagreed since sheer common sense shows these events are a collaboration for the personal benefit of the families who choose to participate. So Rhea Lana refused to comply with the department’s decision.

The feisty mom even wrote an op-ed essay published in USA Today citing her problem. The department responded in childish fashion by emailing her customers and actual employees suggesting they sue her for back wages. Soon arrived the department’s letter warning that if Rhea Lana failed to change her model, she’d be classified as a “willful violator” subject to millions of dollars of fines and penalties.

Good grief. This sound to anyone else like the former Soviet Union?

So Rhea Lana sued in 2014. But the government blocked her access to the courts by asking for the case be dismissed, saying their threatening letter was actually just sorta, kinda, well, a “polite letter” warning her of what could happen. They argued that since it was not an official “final agency action,” she had no right to a judicial review.

The tenacious lady eventually did win the right for a judicial review at the D.C. Circuit. And that meant the department had to defend its original decision. However, turns out that decision was based on the wrong legal standard and not supported with a shred of valid reasoning, as required by the Administrative Procedures Act, she says.

This caused the department to go to the effort of composing a new document more than three years later, which it today claims was the real reasoning for the initial decision. Say wha?

The new declaration isn’t supported in the original record. However, the district court again somehow ruled in the government’s favor yet did concede: “Nothing in the court’s decision should be read to detract from the Riners’ success in building their business or to suggest that their labor practices are designed to exploit consignors who volunteer to assist with sales.”

“Rhea Lana’s does not ‘compensate’ consignor-volunteers,” Riner said. “They are choosing to work for their own ‘personal purpose’ so their own items will sell, so they will have money to buy new items. They receive only a perk of shopping early passes, which the DOL’s own investigation found had ‘no value other than they allow the volunteers to buy the good stuff.’”

At this point, oral arguments are three weeks away as she lingers beneath the stormy clouds of a crippling penalty that has hung over her family for five years. I see Rhea Lana Riner as a woman fighting to preserve her voluntary business originated and built under the historic American qualities of ingenuity, enterprise and a lot of hard work.

She said she’s fighting for her small business and the national consignment event industry, which has held over a thousand family-helping events each season nationwide for the past 25 years.

I say the Department of Labor needs to find far larger and truly relevant legitimate labor matters to bind within its morass of red tape.

Mike Masterson is a longtime Arkansas journalist. Email him at mmasterson@arkansasonline.com.