What Are the PACA Employment Restrictions?

A PACA licensee may not employ, without USDA approval, a person whose license was revoked or is currently suspended, who was found to have committed a flagrant or repeated violation, or who has an unpaid reparation award issued within two years, or a person who is or has been responsibly connected with such a person (7 U.S.C. 499h(b)). The restriction is part of the Perishable Agricultural Commodities Act, which USDA's Agricultural Marketing Service administers.

Approval with a bond. The Secretary of Agriculture may approve the employment one year after the revocation or the finding of a flagrant or repeated violation, or at any time after nonpayment of a reparation award, if the licensee furnishes and maintains a surety bond. The bond assures that the licensee will conduct business under PACA and pay reparation awards for transactions in the four years after approval (7 U.S.C. 499h(b)).

Approval without a bond. The Secretary may approve employment without a surety bond two years after the effective date of the disciplinary order (7 U.S.C. 499h(b)). The Secretary may also raise or lower the bond amount based on the licensee's business, and approval ends automatically if the licensee does not provide a required increase.

Consequences. After 30 days' notice and the chance for a hearing, the Secretary may suspend or revoke the license of a licensee that keeps employing a restricted person. Upon a determination that a responsibly connected person has been unlawfully employed, the Secretary may extend that person's employment sanction for an additional one-year period (7 U.S.C. 499h(b)).

Who carries the duty. The restriction applies to the licensee that does the hiring. A licensee that continues the employment after the date in a USDA notice risks suspension or revocation of its own license (7 U.S.C. 499h(b)).

Licensing basics. The FAQ on PACA license requirements explains who must be licensed and the annual fees.