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The flap over the cottage-industry ban

It pits self-employed women against organized labor. It squares off free-enterprise Reaganites against New Deal market regulators, small business against big government, and a federal court against Labor Secretary Raymond J. Donovan.

And it has broad ramifications for a little white house on a side street in Ripon, Wis. (pop. 7,053).

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That's the home of The Silent Woman, a firm making women's apparel run by Ripon housewife Jean Bice. Begun as a home business, it has grown to require outside help from local seamstresses like Mary Clement. Mrs. Bice supplies her with fabric, thread, and a picture of the garment. Mary, who likes supplementing her schoolteacher husband's income but wants to work at home during her children's school years, uses her own sewing machine, sets her own hours, and intersperses her stitchery with household chores.

Cottage industry at its finest can be a creative resolution of the dilemma facing working mothers. Paid on a piecework basis, Mary earns close to $8,000 a year - averaging about $6 an hour. ''I have the best of both worlds,'' she says. And The Silent Woman, says Mrs. Bice, is ''perfectly happy.''

There's just one problem: Mary's work is illegal.

She is what the Labor Department calls an industrial homeworker - not self-employed, but not working in a factory. Under the rules of the Fair Labor Standards Act of 1938, industrial homework is outlawed in seven product areas, among them knitted outerwear, jewelry, gloves and mittens, and women's apparel. The reason: Homeworkers in these low-skill jobs are said to be open to exploitation from employers paying less than the minimum wage (currently $3.35 an hour).

''We had never met the government before,'' Mrs. Bice recalls. But in 1981 federal officials descended upon her. They told her to (a) hire the seamstresses as regular employees; (b) pay them minimum wage and cover their social security and insurance; and (c) make them come to work in a factory. Alternatives? She could supervise their hours in their homes.

Impossible, says Mrs. Bice. ''I have women who are feeding babies and bringing in hay. How am I going to know they worked eight hours for me?'' Hiring would reduce their earnings and add 25 percent to her costs - enough to close down The Silent Woman.

Under the pressure of such evident inequities, Secretary Donovan moved to lift the homework ban shortly after taking office in 1981. He began by dropping the restrictions for knitted outerwear - a move that delighted a group of rural Vermont women who knit ski caps at home. But late last month, in a case brought by several parties, including the International Ladies' Garment Workers' Union, a three-judge federal appeals panel ruled his deregulation illegal, noting that the Labor Department failed ''to engage in reasoned decision-making'' in arguing for a reversal of the ban.

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Why should the ban stand? Because, says Garment Workers' Union general counsel Max Zimny, ''it is utterly impossible to regulate industrial homework in the apparel industry.'' He talks of sweatshops, immigrants working for pennies in lightless barrios, and children slaving at knitting machines after school. Despite the ''isolated experience of the compliant homeworker'' in Wisconsin, he insists that there is no middle ground: Only a complete ban will work.

That argument won't wash for Mary Clement. Like many opposing the ban, she sees it as little more than a cow sacred to organized labor. ''Because I want to be home and raise my kids,'' she says, ''I feel I'm being discriminated against. I resent being told I have to be protected by a union.''

Lawyers at the Washington-based Center on National Labor Policy, which represents The Silent Woman in its not-so-silent battle, argue that homework is a problem because of the ban. Lift the ban, says the center's Ed Hughes, and homeworkers would be protected by the minimum-wage laws. As banned workers, they can hardly go to the Labor Department and complain of poor pay. Without the ban, they could.

Unless, that is, they are illegal aliens, who apparently constitute a large part of America's industrial homeworkers. But ''I think there are other ways to monitor them,'' says Coralee Smith Kern, whose one-year-old National Association for the Cottage Industry already boasts a membership of 42,000. She is so incensed over the matter that she is calling for ''a non-union union'' of people who work at home. It's a groundswell that may well make major waves: Already Sen. Orrin G. Hatch (R) of Utah has put forward a Freedom of Work-place Act to modify the 1938 labor act.

But is all this clamor really over a few folks with knitting machines? Yes and no. The Wisconsin seamstresses and the Vermont knitters need to have their cases resolved. But opponents of the ban see precedents here for another cottage industry potentially so vast as to dwarf the garment trade: industrial homework using home computers. Such homework - by everyone from bank tellers and secretaries to account executives and teachers - could fundamentally change the meaning of such terms as ''work'' and ''office.''

And that's why efforts to insist upon bans in seven garment categories seem so whimsically Neanderthal. To be sure, there may be reasons to defend some workers in some industries against exploitation. But what America needs, as it lurches into the home-computer age, is something far more sophisticated than wholesale bans. Computers, after all, make sharp distinctions among precisely defined categories. So must our laws.

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