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Like many moms with young kids, Rhea Lana Riner was struggling to live on a very tight budget. While some moms were buying name-brand outfits for their children, Rhea Lana was digging through consignment stores and garage sales to find the best deals. As her kids outgrew their clothing, she would sell them at her own garage sales but couldn't earn enough to keep her budget balanced.
Frustrated by the experience, Rhea Lana decided to invite other cost-conscious moms to get together to buy and sell each other's clothes at her home. Every sale attracted more families eager to sell and buy, so she moved to larger venues. Some of the consignment moms started volunteering to help at the community events.
Hundreds of young families were helped by Rhea Lana's Children's Clothing Exchange, the poorest of whom thanked her while fighting back tears. She moved the sales online, then started franchising the process to help parents and kids beyond her hometown. Last year, 51 Rhea Lana events were held across 22 states.
Her ingenious solution to a common problem earned her an award from Enterprising Women and a mention on Inc. Magazine’s list of the fastest growing companies. Another great American success story, right?
It was, until the U.S. Department of Labor decided that moms helping moms was a Very Bad Thing.
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.
Rhea Lana notes that these moms aren’t employees, they’re customers struggling to clothe their growing families and help others in the process. “By this dreadful logic,” she says, “Build-a-Bear Workshop employs child labor when it lets its young customers assemble their own teddy bears.”
The Obama Administration hasn’t noticed that times have changed. They are clumsily trying to enforce labor laws designed for the factory floor, not at the nexus of the Internet and community activism.
The free market always moves faster than the bureaucracy, which is what makes it so effective. Washington, D.C.’s running battles with food trucks and the popular Uber transportation service prove that red tape chokes innovation and consumer choice. And that hits both buyers and sellers right in the pocketbook.
Like so many Americans, Rhea Lana is being punished for success. Her customers also are being punished for daring to cooperate with other moms without first asking permission from faceless bureaucrats in an out-of-touch capital city.
With their endless appetite for taxing and spending, the Beltway has made it tough enough to make ends meet. They shouldn’t make it even worse by dropping hundreds of regulations on the backs of low-income families.
Follow Jon on Twitter at @ExJon.