Rhea Lana's Franchise Systems puts on semi-annual consignment sales of used toys, clothing, furniture, and the like. Staffed "principally by mothers and grandmothers," the sales are not much different from community fundraisers or garage sales -- except that Rhea Lana is a for-profit business that franchises its sales, but doesn't pay any of its salespeople.
Failing to pay its salespeople brought Rhea Lana to the attention of the Department of Labor, which sent the company a letter notifying it of its noncompliance and warning that penalties could be imposed for repeated or willful violations. Rhea Lana sought to challenge the DOL's determination that it was out of compliance -- and won the right to do just that in the D.C. Circuit last week. The ruling could greatly expand business's right to challenge DOL determinations before any enforcement action is taken.