Abusive Federal Agency Practices

November 19, 2014

I have been dealing with the Department of Labor, which selected an immigrant-owned small business to audit for compliance with minimum wage and overtime laws.  After the audit these unfortunate people were told that they were subject to a fine of over $100,000.  The Department of Labor refused to disclose the basis of this finding but the responsible agent did give us a brief summary of the conclusions.  Great pressure was then put on the owners to respond within a couple of days.  This of course would give no meaningful opportunity to go over the daily time records for the 16 month period of the audit, in order to verify the Department’s conclusions.

The reason for this demand of a hasty response seems to have been that the Department of Labor’s accusations and conclusions were not supported the records of the little business.  The time records, many of which the Department of Labor had not even looked at, refuted the claims against the small business.  We scoured the time records to see how they might have been interpreted to support the allegations of the Department and could not imagine how it justified its claims.

I sent a letter explaining what the time records said.  I couple of weeks later I got an email from the agent who made the assessment, saying she’d get back to me next week with a response.  That was over two months ago.  Still waiting.

At first blush it looks like the agent was trying to make her bones at the Department by abusing a vulnerable business in which the owners, because of language and culture issues, were unlikely to be able to defend themselves and might be daunted by the possibility of this the affecting their immigration status.  My guess though is that the agent was relying on accusations of disgruntled former employees, putting greater reliance on that than a careful examination of the records.

Small businesses have enough difficulties in the roiling seas of commerce without being subject to this kind of abuse.  The risks here are best limited by accurate and well organized record keeping and by having the employees sign a form at the time of their departure from the job that includes reference to such matters.


Water Rights: Let the Buyer Beware.

November 4, 2014

Water rights issues are cropping up with increasing frequency as water becomes a diminishing commodity. In the Puget Sound area this is a somewhat ironic concept, as flooding seems to have been on the uptick and the drizzle for which the area is renown has certainly not disappeared. Flooding however is often attributed to logging and development which causes rainwater to become surface water, rather than groundwater, available through wells. The expansion of the population beyond areas served by water systems has created a proliferation of wells, drawing from largely unknown underground estuaries. This increased burden on the supply of water diminishes the quantity of water available to wells, sometimes with disastrous results.

Care must be taken when purchasing water rights or acquiring property with water rights. The value of property is often dependent on water rights but too often property is purchased without a thorough investigation of those water rights. Scrutiny of a title report may give the buyer false confidence in the availability of water.

In verifying the validity of a water source the inquirer enters into the Byzantine realm of Washington water rights, which defy easy explanation. Broadly speaking there are three levels of inquiry. First water systems must be permitted by the State Department of Ecology. However, there are certain exemptions from state permitting requirements and water systems that predate the water code of 1917 need not be permitted. Roughly 166,000 systems claim to have originated before 1917 but very few claims, if any, have been adjudicated. Next the county determines compliance with health requirements and conducts routine inspections. This is usually a fairly straight forward inquiry for the purchaser.

The last common level of inquiry relates to the assignment of water rights. The right to draw water is assignable. As to any water source that is off-site, the validity of the transfer of water rights must be verified. If there is a well on site, all documents transferring rights to others, or allocating rights of use, must be verified. When creating a joint-use well a great deal of difficulty can be avoided by carefully delineating each user’s rights and duties. This warrants as much care as the determination of the rights and regulations governing a home owners’ association.


National Collection Agencies.

February 21, 2013

It recently came to my attention that many collection agencies have not registered as collection agencies to do business in Washington or in other states in which they operate.  In order to avoid having to do this some say that they have purchased the debt so they are not collecting it for someone else.  This is a fairly transparent means of trying to avoid collection agency law in the states as well as application of the federal Fair Debt Collection Practices Act.  In many states, including Washington, this tactic does not work.  The law covers debts purchased by  businesses in the debt collection business.  Failure to register exposes these businesses to significant damages and is an enormous advantage to any consumer.