Labor & Employment Law Daily Wrap Up, EMPLOYEE STATUS—M.D. Pa.: Child labor law, other violations result in $1.3M penalty against Mennonite nonprofit, (Dec 19, 2025)

By Todd Harrison, J.D.

Liberty Ridge Farm was purportedly established to “rehabilitate” young men, who were forced to work six days a week, leading to yearly revenues close to or exceeding $1 million.

Granting summary judgment to the Department of Labor with regard to several claims arising under the FLSA against a Mennonite nonprofit, a federal district court in Pennsylvania found that the teens and children who were sent to a labor farm by their parents in an effort to address alleged behavioral issues should have been considered employees for FLSA purposes. The same determination was also made as to “mentors” assigned to oversee the young laborers and who were paid a monthly stipend of $250 plus room and board. The court found the violations to be willful, and ordered the nonprofit to pay back pay and liquidated damages totaling more than $1.3 million, while permanently enjoining the defendants from violating the FLSA (Chavez-Deremer v. Mennonite Messianic Mission of the Eastern Pennsylvania Mennonite Church, No. 1:22-cv-01355 (M.D. Pa. Dec. 17, 2025)).

Defendant Mennonite Mission is a 501(3)(c) organization consisting of “group of members of the Eastern Pennsylvania Mennonite Church Ministries” who together conduct the mission activities of the church. The organization formed the Liberty Ridge Farm Committee (LRFC) to operate Liberty Ridge, the activities of which are the subject of this lawsuit.

“Rehabilitation program.” Parents and guardians in the Mennonite community sent their “troubled” children to Liberty Ridge. As part of Liberty Ridge’s regimented programming, during a typical day minors spend between four and seven hours building pallets, tending to chickens, and chopping wood. Those activities generated products that the defendants then sold commercially. The minors worked six days a week and faced punishment if they were too slow or refused to perform tasks, including the dragging of chains.

Mentors. In addition to its minor charges, Liberty Ridge also “employed” mentors to work with the minors in a supervisory capacity. Mentors were informed prior to their arrival that they would receive a monthly stipend of $250 along with room and board. They were tasked with supervising the minors 24 hours a day and typically worked from six in the morning until nine at night up to six days a week. Like the minors, mentors also built pallets, fed chickens, and chopped wood.

Revenue. The tasks performed by the minors and mentors generated significant annual revenue for Liberty Ridge. In 2019, this amounted to more than $900,000, more than $800,000 in 2020, and more than $1.2 million in 2021.

Payment. It was undisputed that the minors did not receive payment for hours “worked” at Liberty Ridge, and mentors did not receive minimum wage or overtime for hours “worked” in excess of 40 per week. The defendants did not track the number of “hours” worked by either the minors or the mentors.

Applicable tests. Turning to the case at hand, the court first addressed the question as to which “economic reality” test should be used to determine whether the minors and mentors can be considered employees under the FLSA. In its initial brief, the DOL relied on the Alamo Foundation test. The defendants initially relied on Alamo Foundation in arguing that the mentors were volunteers and on the Walling test to argue that the minors were trainees.

After the parties completed their briefing on their summary judgment motions, the Third Circuit issued its opinion in Johnson v. National Collegiate Athletic Association, 108 F.4th 163 (3d Cir. 2024), which considered whether student athletes are employees under the FLSA. The court directed the parties to file supplemental briefs in the wake of this decision.

DOL maintained that although the Third Circuit created a new four-factor test for the “sui generis” fact pattern addressed in Johnson, it reaffirmed the tests used to evaluate the employee status of trainees and volunteers. As such, DOL argued that those precedents should guide the court in its volunteers and trainees determination. Even so, if the court were to apply Johnson, DOL contended that the mentors and minors should still be considered employees.

For their part, the defendants simply utilized the Johnson framework to support their argument. Ultimately, the court opted to utilize the tests from Walling and Alamo Foundation to evaluate the employment status of the minors and mentors, respectively.

DOL claims. DOL moved for summary judgment on the following issues: (1) Mennonite Mission is a covered enterprise engaged in commerce pursuant the FLSA; (2) LRFC’s treasurer is jointly liable as an employer; (3) defendants’ employees are entitled to minimum wages; (4) defendants’ employees are entitled to overtime wages; (5) defendants engaged in oppressive child labor; (6) defendants violated the FLSA’s recordkeeping provision; (7) the violations were willful; (8) defendants are jointly and severally liable for $669,607.83 in back wages; (9) defendants are jointly and severally liable for the same amount in liquidated damages; and (10) defendants should be permanently enjoined from violating the FLSA. The court addressed each claim in turn.

Covered enterprise. According to DOL, Mennonite Mission, doing business as Liberty Ridge, is an enterprise engaged in interstate commerce. DOL pointed to the fact that its annual sales volume exceeds $500,000 and further notes that the pallets built by the minors and mentors crossed state lines.

Employees? In further support of its position, DOL contended that the minors and mentors were employees under the FLSA, pointing to the fact the LRFC interviews prospects, supervises them, determines their payrates, sets their schedules, and evaluates their work progress. DOL argued that the facts of this case were analogous to the Supreme Court’s opinion in Alamo Foundation, wherein it held that church volunteers were actually employees under the FLSA because compensation agreement can be express or implied, and, as in Alamo Foundation, the mentors and minors had the expectation of some sort of compensation for their work, thus rendering them employees.

Further, DOL noted that the minors were placed at Liberty Ridge by their parents, were punished if they did not comply with its rules, and could not leave without parental or Liberty Ridge’s approval, all of which suggested that their role was not voluntary. DOL additionally asserted that the mentors were employees, not volunteers, noting that they had “expected compensation” in the form of a monthly stipend along with room and board.

In response, the defendants asserted that the minors were “student-trainees in a Faith-based schooling and vocational skills program.” They cited Walling’s holding that “prospective railroad brakemen who received on-the-job training, but were not paid during the training period, were not entitled to wages under the FLSA,” in arguing that here, as in Walling, the court should find that the minors were student trainees who are not entitled to wages.

As to whether the mentors should be considered volunteers, the defendants maintained that the mentors themselves determined the length of time that they would serve, did not expect payment, and were merely volunteers for “for a nonprofit organization with a religious or humanitarian objective.”

No curriculum. Responding to the defendants’ contention that the minors were part of a faith-based schooling program, DOL noted that there was no record evidence indicating the minors had received an education similar to what they would have received in other schools, nor was Liberty Ridge an accredited school during the period in question. DOL also argued there was no evidence indicating Liberty Ridge’s program benefitted minors, especially in light of the harsh punishments to which they were subjected. DOL further maintained that the minors expected compensation, in the form of room and board, such that this factor also pointed to their status as employees.

Upon consideration of the foregoing, the court determined that Mennonite Mission, in operating Liberty Ridge, was a covered enterprise for FLSA purposes.

Economic realities. Turning to the minors’ status as employees, the court determined that the work performed by the minors was done with the expectation of implied compensation. The provision of food and shelter distinguished this case from Walling, explained the court, because it demonstrated that the minors expected wages in another form.

The court also found that the minors did not work for their own personal purpose or pleasure. Even if the alleged vocational training they received was legitimate, the undisputed facts nevertheless indicated that they did not voluntarily join or participate in the operations of Liberty Ridge.

Minors were employees. With regard to whether the defendants received an “immediate advantage” from the work of the minors, the court answered this question in the affirmative. It was not persuaded by the defendants’ argument that the minors’ work only represented a fraction of Liberty Ridge’s activity and that donations made by the minors’ parents offset the cost of the program, as opposed to its commercial transactions. The court noted that the contributions by the parents ranged from 7.5 percent to 13.4 percent of Liberty Ridge’s annual revenues over the years in question. Accordingly, the court determined that the minors were employees for FLSA purposes.

As were mentors. As to the mentors’ status as employees, the court considered whether their work was performed in expectation of express or implied benefits, for their personal purpose or pleasure, and for an “immediate advantage” to the defendants.

Here, the court found that the existence of a monthly stipend supports the determination that the mentors were employees who worked in expectation of compensation because it was an express compensation agreement. With regard to the issue of immediate economic advantage, the mentors also built pallets and tended chickens. Thus, their work contributed to Liberty Ridge’s annual revenue.

Although the court determined that the mentors did volunteer for their own “personal purpose or pleasure,” they nevertheless worked in expectation of both express and implied compensation such that they were not exempt from the FLSA’s protections. As such, the court considered the mentors to be employees as well.

Joint employer. Turning to the question of whether LRFC’s treasurer is a joint employer under the FLSA, the court determined that he was. There was some evidence that he interviewed prospective minors and mentors before ultimately deciding whether to welcome them to Liberty Ridge. However, without more, the court found this factor to be neutral. It was undisputed that he would set the work schedules and the stipend amount for the mentors, which weighed in favor of a joint employer determination. It was also undisputed that he at least once approved of a minor’s chain dragging punishment, which also weighed in favor of a joint employer relationship. Finally, as treasurer, he entered into business agreements on behalf of Liberty Ridge while also managing payroll, a factor that also counted against him.

In addition, the court noted that there were other indicia of significant control suggesting a joint employer relationship, including the fact that the treasurer registered Liberty Ridge’s paperwork with the state. Accordingly, the court found the treasurer was liable for FLSA violations as a joint employer.

Minimum wage violations. Next, the court considered whether the defendants violated the FLSA’s minimum wage provisions. The defendants appeared to rest on the assertion that the mentors and minors were not employees, which the court had determined was not the case. Thus, summary judgment was granted to DOL on this claim.

Overtime violations. For similar reasons, the court granted summary judgment to DOL on its claim that the defendants violated the FLSA’s overtime provisions.

Child labor. Addressing whether the defendants engaged in oppressive child labor, the court found that they had, noting that the record clearly supported a finding that children under the age of 14 worked in the pallet-building shop. Accordingly, summary judgment was granted to DOL on this claim.

Recordkeeping. Turning to whether the defendants violated the FLSA’s recordkeeping provision, the defendants conceded that they did not keep records for the hours worked by mentors and minors. As such, the court found they were noncompliant with this provision and entered summary judgment in favor of DOL.

Due process. Next, the court addressed the defendants’ motion for summary judgment. According to the defendants, designating the minors as employees would violate the Due Process Clause of the Fourteenth Amendment. To support this argument, the defendants relied on several Supreme Court cases dealing with compulsory education laws in arguing that parents have a due process right to educate their children in accordance with their beliefs.

In response, DOL contended, and the court agreed, that this argument was an affirmative defense that was not pleaded. As to the substance of this claim, DOL contended that the defendants lacked standing, and even if they had standing, they failed to articulate how exactly the minors’ parents’ rights would be infringed by requiring the defendants to pay the minors minimum wages for their work. The court also agreed, noting that the defendants failed to explain how classifying the minors as employees would prevent parents from sending their children to Liberty Ridge or what, if any, constitutional deprivation the minors’ parents would suffer.

As to whether classifying the mentors as employees would violate their due process rights, the court again found this argument was waived as it was not initially raised an affirmative defense, and, even if it had not been waived, it would still fail for standing purposes. The court once again noted that the defendants failed to explain how requiring them to pay the mentors appropriate wages under the FLSA would prevent them, as third parties, from entering into a contractual relationship with the defendants. More broadly, the court found that the defendants failed to explain how the mentors would be prevented from pursuing their own due process claims if they so choose. Thus, the court denied the defendants’ motion for summary judgment on this issue.

Willfulness. Turning to the issue of remedies, DOL pursued three years of liquidated damages for the years of 2019 through May 2022, thus requiring a showing of a willful violation. The court granted DOL’s motion, finding that the undisputed evidence indicated that the defendants did not consult with “any individuals or third parties, including accountants, attorneys, and representatives of other business” pertaining to their FLSA obligations.

Damages. With regard to the calculation of appropriate damages, the court reiterated that the defendants had failed to keep accurate records of hours worked. DOL contended the court could reasonably infer the amount of back wages owed at $669,607.83 based on the fact that minors worked for four to seven hours a day, and further that minors and mentors worked in some capacity nearly every day. DOL looked at the defendants’ admissions and multiplied the hours worked by the minimum wage to calculate the minors’ salary, while doing the same for minimum wage and overtime calculations when it came to the mentors. The court determined that summary judgment as to the reasonable inferred back wages was proper.

As to liquidated damages, DOL maintained that based on the defendants’ admission that they “took no steps” to ensure compliance “makes liquidated damages mandatory in this case.” The court agreed, granting summary judgment on the motion for liquidated damages equal to the amount of the back pay award.

Injunctive relief. Finally, the court permanently enjoined the defendants from violating the FLSA, noting that in light of their open defiance of the DOL’s initial investigation, that they could not be counted on to comply with the FLSA going forward.

The case is No. 1:22-cv-01355.

Judge: Kane, Y.

Attorneys: Andrea Christensen Luby, U.S. Department of Labor, for Martin J. Walsh. Anastasia Shubert-Baranowski (Margolis Edelstein) for Mennonite Messianic Mission of Eastern Pennsylvania dba Liberty Ridge Farm.

Companies: Mennonite Messianic Mission of Eastern Pennsylvania; Liberty Ridge Farm

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