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Iowa restaurant lobby plays stupid games, wins stupid prizes

Iowa Restaurant Association President Jessica Dunker is not happy that the U.S. Department of Labor is fining Iowa restaurants for youth employment violations.

The association has warned its members that federal officials “are taking massive punitive action” against restaurants that follow Iowa’s child labor law. Dunker told the Des Moines Register’s Kevin Baskins that the enforcement actions “are literally going to put people out of business” and accused the federal agency of targeting her association’s board members and award winners. Baskins profiled one Subway franchise owner who is “a nervous wreck” potentially facing “huge fines.”

Iowa Restaurant Association leaders should have expected this scenario when they successfully lobbied the legislature to relax youth employment rules in 2023. U.S. labor officials made clear last year that Iowa’s new law (known as Senate File 542) was “inconsistent with federal child labor law in several respects.” They promised the federal agency would “vigorously enforce child labor protections across the nation,” and said employers violating federal law could face “various penalties, including civil money penalties.”

Dunker’s group and the Iowa Department of Inspections, Appeals, and Licensing downplayed such risks when educating restaurant owners about the new state rules.

RESTAURANT LOBBY HELPED DRAFT CHILD LABOR CHANGES

Dunker was a central figure in efforts to change Iowa’s child labor regulations. Minutes from the Iowa Workforce Development Board’s November 2, 2022 meeting noted that the Iowa Restaurant Association leader informed fellow board members she was “part of a group of employers working group looking at child labor laws.” Their goal was “to have significant revision ready for legislative review and action in the coming session.”

Public records David Goodner obtained last year showed that Dunker led the Child Labor Working Group, which included staff from the governor’s office and several state agencies as well as industry and nonprofit representatives. The restaurant association leader also reached out to legislators who might introduce the proposed changes, since the bill would not come directly from the governor’s office or from Iowa Workforce Development.

Iowa House Commerce Committee chair Shannon Lundgren introduced the first version of a child labor bill in the House in February 2023. Her daughter, Alexis Lundgren, was serving on the Iowa Restaurant Association’s board of directors at the time and is currently the group’s board chair. State Senator Jason Schultz, a past chair of the Iowa Senate Commerce Committee, introduced an identical bill in the upper chamber.

Dunker told Stateline’s Stephen Elliott last year that her group was “most interested in provisions that would allow 14- and 15-year-olds to work later on school nights; allow some underage workers to obtain a driver’s license to drive to and from a job; and allow 16- and 17-year-olds to take and deliver alcohol orders at restaurants.” The original draft bill included all of those points, plus other business-friendly language such as broad immunity for employers operating work-based learning programs for teens.

The restaurant association joined other business groups to lobby for Senate File 542 as it advanced. Senate Republicans agreed to some changes in April, adding language that would allow some injured teenagers to claim workers’ compensation benefits. They also modified the bill to create a study committee on driver’s licenses for minors, instead of changing state rules immediately.

In early May, House Republicans incorporated more suggestions from Democrats, addressing some of the bill’s most harmful provisions and removing some hazardous occupations. Democratic lawmakers in both chambers still uniformly opposed Senate File 542. Every House Republican present for debate voted for the bill, as did all but two Senate Republicans (Jeff Taylor and Charlie McClintock).

“THEY DO NOT RECOGNIZE OUR NEW STATE LAW”

Senate File 542 changed Iowa Code in many ways. The Iowa Restaurant Association’s website page highlighting legislative victories (“OUR WINS ARE YOUR WINS”) summarizes the parts most relevant to the current discussion:

Youth Employment Opportunities

Secured expansion of youth employment opportunity including: lowering of age for restaurant alcohol service to 16, extension of work hours for 14 and 15-year-olds to 9 p.m., and elimination of work permit for teens.

The extended work hours—a priority for the association to address workforce shortages—were among several provisions that “are inconsistent with federal child labor law.”

Under the federal Fair Labor Standards Act, 14- and 15-year-olds “may only work between 7 am and 7 pm and only outside of school hours during the school year and may work from 7 am to 9 pm between June 1 and Labor Day.” Senate File 542 laid out different standards, allowing children under age 16 to work between the hours of 7 a.m. to 9 p.m. from Labor Day through May, and from 7 a.m. to 11 p.m. from June 1 through Labor Day.

In addition, federal law stipulates that “14- and 15-year-olds may work no more than 3 hours on a school day, no more than 8 hours on a non-school day, no more than 18 hours/week during a week when school is in session, and for no more than 40 hours/week when school is not in session.” Senate File 542 allows children under age 16 to work up to 6 hours per day and up to 28 hours per week during the school year.

The Iowa Restaurant Association began warning members in late May that the U.S. Department of Labor “is out in full force across the state. They are taking massive punitive action against Iowa restaurants who are following the new state youth employment hours instead of the federal regulation on hours. THEY DO NOT RECOGNIZE OUR NEW STATE LAW. We are encouraging people to revert to federal work hours for teens under age 16 at this time.”

That message, repeated in the association’s June 7 update, implies there was reason to assume the federal government would accept Iowa’s new regulations.

In reality, federal officials have consistently said they would not tolerate state laws conflicting with federal child labor standards.

“STATES CANNOT NULLIFY FEDERAL REQUIREMENTS”

The first strong signal from the U.S. Department of Labor came in March 2023, after House and Senate committees had approved early versions of the child labor bill, but before either chamber had debated the proposal on the floor. The Des Moines Register’s Tyler Jett reported on a statement from U.S. Solicitor of Labor Seema Nanda, the federal agency’s top attorney.

Without naming Iowa, Nanda called it “irresponsible for states to consider loosening child labor protections.” She emphasized that the federal Fair Labor Standards Act “and its child labor protections apply in all states and no state has the ability to limit these provisions. The Department has and will continue to vigorously enforce child labor protections across the nation.”

Iowa Senate Republicans approved a version of Senate File 542 in April 2023, but had to vote on it again after the House sent the bill back with many changes. During floor debate on May 3, 2023, Democratic State Senator Zach Wahls praised the House amendment, saying it would “significantly” improve the bill. Even so, he urged his caucus to vote against final passage, highlighting provisions on 14- and 15-year-olds that contradict federal law.

On May 17, 2023—after the legislature adjourned for the year, but before Governor Kim Reynolds signed Senate File 542—Iowa Senate Democrats released a letter State Senator Nate Boulton received from Nanda and Jessica Looman, principal deputy administrator of the Labor Department’s Wage and Hour Division. That letter confirmed that the Fair Labor Standards Act “establishes federal standards with respect to child labor, and states cannot nullify federal requirements by enacting less protective standards.”

The letter flagged some specific provisions that conflict with federal law. It said the passage permitting 14- and 15-year-olds “to work six-hour nightly shifts” appeared to violate federal “child labor regulations in two ways.” Such shifts would be longer than federal law allows on a school day, and the young employees would be working later than 7 pm during the school year.

Nevertheless, Reynolds signed Senate File 542 on the Friday before Memorial Day weekend, saying in a written statement, “Iowa joins 20 other states in providing tailored, common sense labor provisions that allow young adults to develop their skills in the workforce.”

Boulton wrote to Labor Department officials about Iowa’s new law again over the summer. Nanda and Looman replied in August 2023, confirming that “while states can pass more protective laws, states cannot nullify federal requirements by enacting less protective standards.” They agreed that certain parts of Senate File 542 “appear to be inconsistent with federal child labor law,” and further stated:

Where provisions of state child labor law are less protective than the FLSA’s child labor provisions, a FLSA-covered employer must follow the more protective provisions of the FLSA. The Department has broad authority to enforce the child labor provisions of the FLSA. FLSA-covered employers that violate federal child labor law are subject to various penalties, including civil money penalties, which depend on the nature of the violations and the underlying factual circumstances.

The Iowa Restaurant Association was aware of the risks facing members that followed new state law when scheduling shifts for their youngest employees.

“PROBABLY THE BIGGEST QUESTION” FOR RESTAURANT OWNERS

The association’s legislative wins page does not hint that the “expansion of youth employment opportunity” conflicts with federal law.

But Dunker did acknowledge that problem in a June 2023 webinar explaining the forthcoming child labor changes. About seven minutes in, she put this slide on screen, reflecting what she called “probably the biggest question” the association expected to hear from members. How should employers approach the different federal and state standards on working hours for young teenagers?

Dunker paraphrased the wording in small print on that slide.

It’s up to the individual employer to determine whether it’s to their benefit to use these expanded duties and hours. State law will change, and federal law does remain the same, and we don’t know what the federal Department of Labor’s enforcement attitude will be. Even if Iowa employers are in compliance with state law, federal authorities may in fact come to your business to challenge your choice here. And employers should seek legal advice from an attorney if you do plan during the school year to offer those extended hours, which are now in compliance with state law.

Later in the webinar, a restaurant owner circled back to this question: “Information still states that you should go with the law that offers the most protection. So how will our differentials be handled?”

Mitchell Mahan of the Iowa Department of Inspections, Appeals, and Licensing referred back to the slide posted earlier. He commented that the federal labor department “has potentially very broad jurisdiction over restaurants, and we don’t know exactly how they’re going to proceed. You know, are they going to really be looking for things? Are they kind of (going to) back off?” He recommended “taking a good look” at that slide.

It’s not clear how many of Iowa’s “nearly 6,000 eating and drinking establishments” had someone watch that webinar. Michelle Cox, a Subway franchise owner in Maquoketa, told Baskins, “I followed the state law to the letter because that’s what I thought I was supposed to do.” She didn’t realize she was violating federal law. Now she fears fines will put her out of business.

STATE AGENCY SENDS MIXED SIGNALS TO EMPLOYERS

Nanda and Looman told Boulton in August 2023 that federal officials had recommended that the Iowa Department of Inspection, Appeals, and Licensing “include specific language on its website and in compliance assistance materials” explaining that employers are subject to federal as well as state law. “We hope that this language may provide clarity to employers who could violate the FLSA by, for example, only complying with a less protective Iowa child labor law.”

Although the department did incorporate such language, it did so in ways Iowa business owners could easily misunderstand.

The child labor page on the Division of Labor’s website lists “Changes Effective July 1, 2023” near the top, including new allowable working hours for “Minors under 16.” You have to scroll way down to find a section labeled “Federal Labor Law,” which reads,

For information on federal child labor law, contact the U.S. Department of Labor, in Des Moines at 515-284-4625. Employers are subject to both state and federal child labor laws and, when there are differences, must follow the law that gives the most protection.

The page does not clarify which parts of Iowa’s new law differ from federal requirements. A business owner would need to contact the federal agency to learn they should not allow 14- and 15-year-olds to work past 7 pm during the school year or 9 pm during the summer.

The Iowa Restaurant Association’s youth employment resources page links to the Iowa Department of Inspection, Appeals, and Licensing’s “Guide for Employers About Iowa Child Labor Law.” Several columns of bullet points in that brochure detail “What an Employer Needs to Know.” Allowable times and hours for workers under age 16 are near the top—but only the state requirements are listed.

Those who make it to the end of the guide might see the following section:

Federal Law

Whether it’s hours or duties, you need to comply
with the federal or state law that gives the most
protection. For further information on federal re-
strictions, consult with the Wage and Hour Divi-
sion of the Department of Labor at 866-487-
9243, or see https://www.dol.gov/agencies/
whd/youthrules.

Since the pamphlet does not specify the federal rules on working hours or duties, an employer cannot immediately see whether the federal or state law “gives the most protection” to children.

It would have been more honest, and far more helpful, for the state agency to list the federal and state restrictions side by side, with a reminder that employers risk fines or other penalties if they fail to comply with federal law.

ARE THE FEDS SINGLING OUT IOWA RESTAURANTS?

Kevin Baskins’ June 12 article in the Des Moines Register quoted Dunker blasting the federal agency.

“They are literally going to put people out of business for having 10th-graders work until 9 p.m.,” she said. “I mean, if compliance is the actual question, wouldn’t you come in and say, ‘Hey, look, I know what your state law says, but you need to go back to the federal regulation and if you do that and we come back in 30 days and you are still doing this, we are going to fine you? That’s not happening.

“They have picked on my board members. They have picked on my award winners. They have picked on people who are small and don’t have an attorney at the ready. They are on a tour to prove a point,” she said.

If compliance is the actual question, why didn’t Dunker’s organization take labor officials seriously when they repeatedly put their concerns about Iowa’s law in writing last year?

I asked Dunker why she would encourage Iowa Restaurant Association members to believe they would receive a warning before being fined. She responded promptly via email, asserting that Iowa is the fourteenth state to have set hours for workers under age 16 outside of the federal regulations (according to this chart on the Department of Labor’s website). Dunker also told me,

It was our industry’s understanding when these hours were passed by the legislature that Iowa would receive the same treatment as other states which to date, have not faced these draconian enforcement tactics. What’s happening is akin to the DEA arresting only Iowa pot shop owners had the state “legalized” recreational marijuana—even though no other state is experiencing this. We were not trailblazers on the hours. We simply believed there would be consistent enforcement state to state. I have spoken with my counterparts in other states and they have not seen this happening with their members. 

Asked about the basis for her claims that federal inspectors targeted her board members and award winners, Dunker told me,

The reason I think my Board and award winners are being targeted is because everyone who has contacted me is being told they are receiving “random checks” when auditors come in. (No one has been told there was a complaint about their business.) However, they have also been asked upfront by the auditors if they are members of the Iowa Restaurant Association and several have been asked if they know me personally.  

I have 12 restaurants serving on my Board and 4 have already received “random” checks. There are 6,000 restaurants in Iowa. 

Rhonda Burke, a spokesperson for the Department of Labor, did not respond to Dunker’s specific allegations but disputed the idea that Iowa is being singled out. She said the Wage and Hour Division “conducted over 4,500 outreach events involving more than 450,000 participants” last year “to ensure businesses understand how to maintain compliance with federal law.”

The division also has fact sheets and other online resources to inform employers, workers, and their parents. “While we have done several investigations resulting in child labor violations in Iowa, this problem is not unique to the state,” Burke wrote. “The same violations are occurring nationwide, and we are doing everything we can to find violators and stop them.”

Does Dunker believe Iowa employers should be able to flout federal law if the legislature has approved such practices? Shouldn’t state lawmakers have avoided putting business owners at risk of being punished for employing teenagers in violation of federal law?

I am comfortable with the notion that Iowa businesses be allowed to follow laws that are passed through the state’s full legislative process, debated by elected officials and signed into law by our Governor rather than deferring to rules not passed by any elected official but instead created by a nameless, faceless regulatory agency.  

That notion could prove costly to members of her association.

“UNCONSCIONABLE”

I contacted the Republicans who introduced the child labor legislation (Lundgren and Schultz) and the bill’s floor managers (State Senator Adrian Dickey and State Representative Dave Deyoe) with similar questions about the enforcement actions.

Dickey replied via email, but asked me not to publish any part of his comments unless I included the entire message.

Lundgren, Schultz, and Deyoe did not respond. Deyoe told the Des Moines Register, “I think this is more of a punitive action by the Biden administration who didn’t like it when we passed this law.” He suggested “a change in administrations” could resolve the problem. 

State Representative Sean Bagniewski, the lead Democrat on the child labor bill, commented, “Rather than addressing our state’s labor shortage by encouraging better wages and benefits, Iowa Republicans gutted child labor laws so that younger Iowans could fill their employment gap. Their policies are now skirting federal labor requirements and putting the risk on Iowa businesses to decide whether to follow state or federal law.”

Boulton called it “disingenuous to claim there was no warning,” when he and many others “raised concerns about this legislation having conflicts with federal law from day one. They just dismissed our concerns.”

He noted that Democratic lawmakers sought guidance from the Labor Department before and after the bill passed, and “widely shared the extremely clear response: federal regulations on child labor would still be enforced.” He finds it “unconscionable” that trade associations or a state agency would tell businesses to follow the new state law:

The U.S. Department of Labor’s direct and clear warnings were undeniably clear and known. Yet they still told these employers to follow a state law despite those clear instructions that the federal law on child labor would still be strictly enforced by the federal agency to protect the “safety and well-being of young workers” in Iowa.

I truly cannot understand how they could justify telling anyone to still follow the state law after all those warnings, but that’s precisely what they did. It was unforgivable to put these businesses in this position after the effort from those of us who did all we could to prevent this result.

ADVENTURES IN MISDIRECTION

Cox, the Subway franchise owner fearing large fines, harshly criticized the federal approach when speaking to the Des Moines Register’s Baskins.

“If this was something that (the Labor Department) was worried about, people breaking the law, why couldn’t DOL send out letters to these businesses saying, ‘Hey, listen, we understand Iowa changed the law, but you must follow the federal law and explain it and give us all a heads up,’” she said. “But I told the inspector, ‘You couldn’t do that. You just want to come in and start busting us. If it was so important, why didn’t you guys reach out to all those people that thought it was OK?

“’Come and tell me I’m doing it wrong. I’ll fix it, and we will move on, but don’t come in here and threaten me with these huge fines.’”

Her anger is misplaced. The Iowa Restaurant Association should have advised affected businesses last year to follow federal law or run the risk of huge fines.

Instead, the group boasted about helping to enact new youth employment rules. Now Cox is on the hook—but for some reason, she sees Dunker as “a godsend.”

I asked Dunker again why her organization didn’t make sure all Iowa restaurant operators understood they are subject to federal law. She replied, “Our expectation was, and continues to be, that the treatment of restaurants in Iowa would be consistent with other states, particularly those who proceeded us in changes to under 16 work hours. There have always been complaint-based DOL audits in all states. That is not what’s happening in Iowa right now.”

I don’t know how federal officials could have been any more clear than saying “no state has the ability to limit” the Fair Labor Standards Act, and the federal agency “has and will continue to vigorously enforce child labor protections across the nation.”

Play stupid games, win stupid prizes.