Rhea Lana In Battle With Labor Department Over Business Practices

Consignment entrepreneur Rhea Lana Riner started her business from her garage and living room in Conway.

The mother of three wanted a way to buy and share quality name-brand clothing for mothers like herself. Through word-of-mouth marketing and a proprietary software inventory tracking system that she and her husband developed, she built Rhea Lana’s Consignment Events into a local and regional attraction.

In recent years, she’s grown the business to 22 states including some franchises.

Now, the U.S. Department of Labor is investigating her business model, which includes volunteers who help set up each sale event for the privilege of getting first dibs on a walk-through of the sale.

Labor officials say Riner’s volunteers are in fact employees, but she’s taking to the airwaves and newspapers to take issue with the finding.

“We provide an avenue that the consigners who shop early, they get to volunteer, they get to shop early, they get first selection, they get the best prices,” she said on Fox Business News. “So there is incentive for them to volunteer at our events.”

Under the Fair Labor Standards Act, employees may not volunteer services to for-profit private-sector employers. The Labor Department determination may mean Riner would have to pay her volunteers the federal minimum wage of $7.25 per hour and fill out IRS paperwork.

In a column in USA Today, Riner defends her business model.

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

Riner says the 1938 Fair Labor Standards Act needs an overhaul in a way that will get government bureaucracy out of the way.

“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,” she said.