Wage Violations Percolate in the Coffee Business

By Frances Ma and Allison Bowles

Everyone knows that coffee is one of the most popular drinks in the world. But not everyone knows that growing and harvesting coffee is extremely labor intensive, and labor violations are rampant throughout the global industry.

Puerto Rico has been a player in the global coffee game for over 200 years. Today, thousands of people are employed to plant, grow, pick, process, roast, sell and serve coffee on the island and beyond.

Many of the coffee pickers in Puerto Rico work in extreme conditions (bad weather, steep terrain, harsh sun) and are paid by the piece, which − though legal − has the potential to result in violations of the federal minimum wage. Puerto Rican coffee growers have maintained a long history of payment by the piece to coffee pickers.

However, in accordance with federal law, if a picker doesn’t pick enough to earn the minimum wage based on piece rate payment, then the employer must pay the difference.

Coffee trees produce berries that are harvested when ripe.

It is the Wage and Hour Division’s job — and a priority — to make sure these thousands of workers in Puerto Rico’s coffee industry are receiving the minimum wage under the Fair Labor Standards Act. Investigators frequently visit coffee farms to make sure growers are in compliance.

Several years ago, when investigators visited one of the largest coffee growers in Puerto Rico, Beneficiado de Café Las Indieras, doing business as Hacienda Remanso de Paz, they found that the company and president Wilfredo Ruiz Vargas had failed to pay farmworkers and coffee pickers the federally required minimum wage of $7.25 for all hours that they worked.

In fact, most coffee pickers were earning between $3 and $4.50 per hour. Some made as little as $2 per hour or less. The piece rate system simply was not getting them up to minimum wage for all hours worked − and the employer was not making up the difference.

A lack of accurate records of employees’ wages, hours and other conditions of employment (another violation of the FLSA) meant that it was impossible for management to even determine whether employees were being properly paid.

Working with the Wage and Hour Division investigators, lawyers from the department’s Office of the Solicitor filed suit against the company and its president in federal court. We engaged in contentious litigation for almost two years, much of which was followed closely by the local coffee industry and monitored by the Puerto Rico Department of Agriculture. This case was uniquely challenging because it required tremendous effort to physically locate employees throughout the island and gain their cooperation and trust.

In the end, we secured a settlement with the defendants to set working conditions on the right track.

Not only did they pay $101,484 in back wages to more than 170 farmworkers and coffee pickers who were underpaid between 2011 and 2014, but the consent judgment incorporates a detailed compliance plan to ensure that workers are paid correctly going forward.

Specifically, the judgment orders defendants to maintain accurate and complete records of employees’ work hours and pay rates, participate in Wage and Hour Division training sessions on the FLSA, and provide written notification to all workers of their rights under the FLSA.

The judgment also prohibits defendants from soliciting or otherwise trying to get workers to return back wage payments, discharging or retaliating against employees who disclose or threaten to disclose FLSA violations or cooperate in an investigation, and violating the FLSA in the future.

This case and its outcome are a reminder to coffee growers and other agricultural employers that they have a responsibility to ensure compliance with the law. The traditional payment system of payment by the piece does not need to change, but compliance with the law does — including during the slow part of the harvesting season when coffee pickers aren’t picking as much coffee.

We’re hopeful that the outcome of this case will be pivotal in making sure workers in this industry — many of whom have been underpaid in the past — receive the pay that they’ve earned.

Editor’s note: Employers and workers can learn more about related federal labor laws at dol.gov/whd or by calling 1–866–4USWAGE.

Frances Ma is a trial attorney and Allison Bowles is a senior trial attorney in the department’s Office of the Solicitor in New York. Along with Summer Silversmith, both conducted the litigation in federal district court.