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Labor Law· 4 min read· in Careers & Work

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

The U.S. Supreme Court will hear a constitutional challenge to the Department of Labor's use of in-house administrative judges to levy fines and collect back wages. The ruling could fundamentally reshape how federal labor laws are enforced against employers.

By Isabella Vega

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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 administrative path for employers contesting Department of Labor wage violations.

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]

The case stems from a 2015 investigation into a New Jersey farm utilizing the H-2A temporary agricultural worker program.

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]

Key differences between standard federal courts and agency administrative courts.

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]

Key points

  • The Supreme Court will decide if the Department of Labor can use in-house administrative judges to impose wage penalties.
  • The case stems from a $500,000 fine levied against a New Jersey farm for alleged H-2A visa program violations.
  • The 3rd Circuit Court of Appeals previously ruled that the farm was entitled to a federal jury trial, citing the 2024 SEC v. Jarkesy decision.
  • A broad ruling against the DOL could force the agency to litigate all wage disputes in federal court, significantly slowing enforcement.

What we don’t know

  • Whether the Supreme Court will issue a narrow ruling specific to the H-2A immigration program or a broad ruling affecting all DOL wage enforcement.
  • How the Department of Labor would handle its current backlog of wage disputes if forced to transition all cases to federal district courts.

How we got here

  1. 2015

    The Department of Labor investigates Sun Valley Orchards for alleged violations of the H-2A guestworker program.

  2. 2021

    Sun Valley Orchards files a federal lawsuit challenging the constitutionality of the DOL's in-house administrative courts.

  3. June 2024

    The Supreme Court rules in SEC v. Jarkesy that the SEC cannot use in-house courts to impose civil penalties for securities fraud.

  4. July 2025

    The 3rd U.S. Circuit Court of Appeals rules in favor of Sun Valley, holding that the farm is entitled to an Article III federal court.

  5. April 2026

    The U.S. Supreme Court grants certiorari to hear the DOL's appeal in its upcoming term.

Constitutional Originalists & Employers 40%Labor Enforcement Defenders 40%Legal & Administrative Scholars 20%
Constitutional Originalists & Employers
Agency courts are fundamentally unfair and deny citizens their constitutional right to an independent judge and jury.
Labor Enforcement Defenders
Administrative courts are essential for the efficient enforcement of complex regulatory programs and the protection of vulnerable workers.
Legal & Administrative Scholars
The Supreme Court must clarify the messy boundaries of the public rights exception following the Jarkesy decision.

Perspectives this story doesn't cover

  • H-2A guestworkers whose back wages are delayed by litigation
  • Federal district court judges facing potential caseload increases

Sources

Source coverage

8 outlets

3 viewpoints surfaced

Constitutional Originalists & Employers 40%Labor Enforcement Defenders 40%Legal & Administrative Scholars 20%
  1. [1]Institute for JusticeConstitutional Originalists & Employers

    Supreme Court to Hear Challenge to DOL's In-House Courts

    Read on Institute for Justice →
  2. [2]Fisher PhillipsConstitutional Originalists & Employers

    Supreme Court Picks Up Sun Valley Farms Case: How a Family Farm's Fight Against H-2A Penalties Could Be a Win for All Employers

    Read on Fisher Phillips →
  3. [3]Constitutional Accountability CenterLabor Enforcement Defenders

    Department of Labor v. Sun Valley Orchards, LLC

    Read on Constitutional Accountability Center →
  4. [4]Harvard Law ReviewLegal & Administrative Scholars

    Sun Valley Orchards, LLC v. United States Department of Labor

    Read on Harvard Law Review →
  5. [5]Yale Journal on RegulationLegal & Administrative Scholars

    Finding Jarkesy's Limit: The Supreme Court Signals a Line in the Carrier Cases

    Read on Yale Journal on Regulation →
  6. [6]SHRMLabor Enforcement Defenders

    Supreme Court to Review DOL's Power to Impose Penalties

    Read on SHRM →
  7. [7]Western Growers AssociationConstitutional Originalists & Employers

    U.S. Supreme Court to Review DOL's Enforcement Power in H-2A Case

    Read on Western Growers Association →
  8. [8]U.S. CourtsLegal & Administrative Scholars

    Sun Valley Orchards, LLC v. United States Department of Labor

    Read on U.S. Courts →
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