Supreme Court to Decide if Department of Labor Must Use Federal Courts for Wage Collection

For decades, a business accused of underpaying workers or violating federal labor standards hasn't faced a jury of its peers, but rather an administrative judge employed by the very agency bringing the charges. That streamlined system is now on trial, and the outcome could fundamentally alter how the government enforces workplace rules.

The U.S. Supreme Court has agreed to hear Department of Labor v. Sun Valley Orchards, a constitutional challenge that asks whether the DOL's in-house adjudication of wage violations and civil penalties violates Article III of the Constitution. The Court granted certiorari in late April 2026, setting the stage for a landmark ruling in its upcoming term.[7]

Currently, when the DOL's Wage and Hour Division investigates an employer and finds violations, it assesses back wages and civil monetary penalties. If the employer contests the findings, the case does not go to a standard federal court. Instead, it is routed to a DOL Administrative Law Judge (ALJ).[6]

If the employer loses before the ALJ, they can appeal to the agency's Administrative Review Board. Only after exhausting this internal, executive-branch process can a business seek review in a federal appellate court. Critics have long argued this system forces companies to spend years and thousands of dollars in a forum where the agency acts as prosecutor, judge, and jury.[1]

The current Supreme Court showdown stems from a 2015 investigation into Sun Valley Orchards, a family-owned farm in New Jersey. The farm utilized the H-2A nonimmigrant visa program, which allows domestic employers to temporarily hire foreign laborers for seasonal agricultural work.[2]

The DOL alleged that Sun Valley breached its H-2A employment agreement by providing substandard, infested housing, failing to provide required kitchen access, and violating wage guarantees. An ALJ ultimately ordered the farm to pay over $500,000 in back wages and civil penalties, a decision affirmed by the Administrative Review Board.[8]

Represented by the Institute for Justice, Sun Valley sued the DOL in federal court. The farm argued that the Constitution guarantees the right to an independent Article III judge and a jury trial under the Seventh Amendment when the government seeks substantial monetary penalties for contract-like disputes.[1]

The farm's argument gained massive traction following the Supreme Court's 2024 decision in SEC v. Jarkesy. In that case, the Court ruled that the Securities and Exchange Commission could not use in-house administrative courts to impose civil penalties for securities fraud, as such actions are akin to traditional common-law suits that require a jury.[4]

Relying heavily on the Jarkesy precedent, the 3rd U.S. Circuit Court of Appeals ruled in July 2025 that Sun Valley was entitled to have its case decided by an Article III court. The appellate panel concluded that the enforcement action was analogous to a common-law breach of contract, pulling it out of the agency's jurisdiction.[8]

The DOL, supported by groups like the Constitutional Accountability Center, argues that the H-2A program is fundamentally different from securities fraud. The government contends that immigration and temporary worker programs fall under the 'public rights doctrine'—a legal carve-out for matters that historically could be determined exclusively by the executive and legislative branches.[3]

Because participation in the H-2A program is a voluntary government privilege heavily conditioned on protecting domestic wage standards, the DOL argues it has the constitutional authority to enforce those conditions administratively without a jury.[5]

It remains unclear how broadly the Supreme Court will rule. A narrow decision might only affect the H-2A program and its specific statutory framework. However, a broad ruling could invalidate the DOL's use of ALJs for all wage collection efforts, stripping the agency of its primary enforcement mechanism.[6]

For agricultural employers and the broader business community, a shift to federal courts would provide a more favorable venue. Federal courts require stricter evidentiary standards and offer the protection of an independent judge, making it harder for the government to unilaterally impose crushing fines.[2]

For workers, however, the consequences could be severe. Federal district courts are already heavily backlogged. Forcing the DOL to litigate every wage dispute and penalty assessment before a federal judge could severely bottleneck the recovery of stolen wages, leaving vulnerable workers waiting years for restitution.[3]

As the Supreme Court prepares to hear oral arguments, the case represents the next major battleground over the modern administrative state. The decision will not only determine the fate of Sun Valley Orchards but could permanently reshape the balance of power between federal regulators, American businesses, and the workers they employ.[4]