Department of Labor vs. me: Column

Rhea Lana Riner | USATODAY

As a mother of three who has struggled to stick to a family budget, I know the frustration parents feel as they watch children grow out of brand new clothes seemingly overnight. That's why in 1997, I started a kids' clothing consignment business, a little like the ones that are everywhere now but also a little different.

What started as a small family business operating out of our home has grown to 22 states. Now, though, it might all turn out to be illegal, thanks to the bureaucratic thinking of the Department of Labor.

Help a mother out

The business model that parents thought was an innovation, but that Labor sees as a menace, is simple but effective. You might have heard of it: cooperation.

We rent a large space for a few days, say an unused department store. Parents with clothes and children's items to sell sign up online, enter their items into a computerized tracking system and choose their sale price. Then they bring the clothes and other items to the sale location, label them with preprinted price tags and display the clothes. Parents keep 70%; we keep 30%. It is easier than a garage sale, makes more money for parents, and shoppers efficiently find good deals.

A big part of our success are the hundreds of parents — both consignors and shoppers — who voluntarily work brief shifts to help set up before the sale starts. In exchange, these parents get to shop first with more choices and better merchandise.

In January, though, the Department of Labor noticed all this cooperation going on. Months later, investigators concluded that volunteers are "employees" under the Fair Labor Standards Act.

This means paying the federal minimum wage of $7.25 per hour, filling out IRS paperwork and complying with who-knows-what other rules. And all for a pop-up business that lasts days.

Bear-building tyranny

Think about that for a second. I've offered regular parents the same opportunities that eBay gives independent resellers. When I do it in the real world to recycle used clothes, the Department of Labor says no way. That's bunk. My volunteers are not employees or independent contractors. They're customers.

By this dreadful logic, Build-a-Bear Workshop employs child labor when it lets its young customers assemble their own teddy bears.

Unfortunately, as my situation shows, too many new ideas are being held back by rules that are stuck in the past. When the Fair Labor Standards Act was written in 1938, nobody was imagining a collaborative, social business like mine. And I'm far from the only entrepreneur stifled by outmoded dictates from a world I never lived in.

In many states, cutting-edge transportation companies like Uber, which uses smartphones to match sedan drivers with riders, are being threatened by laws written during the era of the rotary phone.

What's clear is that America's entrepreneurs don't need government as a partner. My business didn't become successful because of government assistance; it became successful because my customers like the way I do business.

The economy thrives when entrepreneurs and consumers are allowed to cooperate with one another. If we want the real world economy to thrive as much as the innovative Internet world, entrepreneurs need the same freedom to innovate.

Rhea Lana Riner is the founder and president of Rhea Lana's, Inc.

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