Marshall v. Jerrico, Inc.

Background

A company that runs about 40 restaurants was found to have more than 150 child-labor violations. A regional Labor Department official originally assessed $103,000 in civil fines, including a large willfulness charge, but an independent government judge reduced the total to $18,500. The company then sued in federal court, arguing that a law requiring these fines to be returned to the Labor Department to reimburse enforcement costs creates a risk that regional investigators would be biased and overcharge employers.

Reasoning

The Court asked whether the reimbursement rule creates an unconstitutional appearance or risk of unfairness. The Court said the regional investigator who recommends penalties is more like a prosecutor than a judge, and the final decision is made in a new hearing before an independent administrative law judge. The opinion relied on facts in the record: fines were a tiny fraction (well under 1%) of the agency budget; the national office, not the regional investigator, decides how to allocate any recovered sums; and allocations have not been tied to an individual office’s penalty totals. For these reasons the Court found any risk of bias too remote to violate the Constitution.

Real world impact

Employers facing child-labor enforcement cannot rely on this reimbursement rule alone to prove an automatic constitutional bias. The Labor Department may continue to apply fines to reimburse enforcement costs under the described procedures. The Court also said it was not closing the door on other kinds of improper motives or extreme facts that might warrant review, so targeted challenges remain possible.