[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
IS DOL EFFECTIVELY ENFORCING OUR WAGE AND HOUR LAWS?
=======================================================================
HEARING
before the
COMMITTEE ON
EDUCATION AND LABOR
U.S. House of Representatives
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, DC, JULY 15, 2008
__________
Serial No. 110-101
__________
Printed for the use of the Committee on Education and Labor
Available on the Internet:
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COMMITTEE ON EDUCATION AND LABOR
GEORGE MILLER, California, Chairman
Dale E. Kildee, Michigan, Vice Howard P. ``Buck'' McKeon,
Chairman California,
Donald M. Payne, New Jersey Senior Republican Member
Robert E. Andrews, New Jersey Thomas E. Petri, Wisconsin
Robert C. ``Bobby'' Scott, Virginia Peter Hoekstra, Michigan
Lynn C. Woolsey, California Michael N. Castle, Delaware
Ruben Hinojosa, Texas Mark E. Souder, Indiana
Carolyn McCarthy, New York Vernon J. Ehlers, Michigan
John F. Tierney, Massachusetts Judy Biggert, Illinois
Dennis J. Kucinich, Ohio Todd Russell Platts, Pennsylvania
David Wu, Oregon Ric Keller, Florida
Rush D. Holt, New Jersey Joe Wilson, South Carolina
Susan A. Davis, California John Kline, Minnesota
Danny K. Davis, Illinois Cathy McMorris Rodgers, Washington
Raul M. Grijalva, Arizona Kenny Marchant, Texas
Timothy H. Bishop, New York Tom Price, Georgia
Linda T. Sanchez, California Luis G. Fortuno, Puerto Rico
John P. Sarbanes, Maryland Charles W. Boustany, Jr.,
Joe Sestak, Pennsylvania Louisiana
David Loebsack, Iowa Virginia Foxx, North Carolina
Mazie Hirono, Hawaii John R. ``Randy'' Kuhl, Jr., New
Jason Altmire, Pennsylvania York
John A. Yarmuth, Kentucky Rob Bishop, Utah
Phil Hare, Illinois David Davis, Tennessee
Yvette D. Clarke, New York Timothy Walberg, Michigan
Joe Courtney, Connecticut [Vacancy]
Carol Shea-Porter, New Hampshire
Mark Zuckerman, Staff Director
Vic Klatt, Minority Staff Director
C O N T E N T S
----------
Page
Hearing held on July 15, 2008.................................... 153
Statement of Members:
Altmire, Hon. Jason, a Representative in Congress from the
State of Pennsylvania, prepared statement of............... 53
Courtney, Hon. Joe, a Representative in Congress from the
State of Connecticut:
Newspaper article, ``Department Is Criticized on Disputes
Over Wages,'' dated July 15, 2008...................... 67
McKeon, Hon. Howard P. ``Buck,'' Senior Republican Member,
Committee on Education and Labor........................... 4
Prepared statement of.................................... 5
DOL trend graphs......................................... 25
Miller, Hon. George, Chairman, Committee on Education and
Labor...................................................... 1
Prepared statement of.................................... 3
Questions submitted to Mr. Passantino.................... 54
Sanchez, Hon. Linda T. a Representative in Congress from the
State of California, prepared statement of................. 54
Statement of Witnesses:
Bobo, Kim, executive director, Interfaith Worker Justice..... 15
Prepared statement of.................................... 16
Kutz, Greg, Managing Director, Government Accountability
Office, Forensic Audits and Special Investigations......... 13
Prepared statement of.................................... 15
Lasowski, Anne-Marie, Acting Director, Government
Accountability Office, Education, Workforce and Income
Security Issues............................................ 7
Prepared statement of.................................... 8
Passantino, Alexander J., Acting Administrator, Wage and Hour
Division, U.S. Department of Labor......................... 8
Prepared statement of.................................... 11
Responses to questions for the record.................... 56
IS DOL EFFECTIVELY ENFORCING
OUR WAGE AND HOUR LAWS?
----------
Tuesday, July 15, 2008
U.S. House of Representatives
Committee on Education and Labor
Washington, DC
----------
The committee met, pursuant to call, at 10:46 a.m., in room
2175, Rayburn House Office Building, Hon. George Miller
[chairman of the committee] presiding.
Present: Representatives Miller, Kildee, Payne, Woolsey,
McCarthy, Kucinich, Holt, Loebsack, Yarmuth, Hare, Clarke,
Courtney, Shea-Porter, McKeon, Petri, Platts, Wilson, Kline,
Foxx, and Walberg.
Staff present: Aaron Albright, Press Secretary; Tylease
Alli, Hearing Clerk; Jordan Barab, Senior Labor Policy Advisor;
Chris Brown, Labor Policy Advisor; Jody Calemine, Labor Policy
Deputy Director; Lynn Dondis, Policy Advisor,Subcommittee on
Workforce Protections; Sarah Dyson, Investigative Associate,
Oversight; Carlos Fenwick, Policy Advisor,Subcommittee on
Health, Employment, Labor and Pensions; Patrick Findlay,
Investigative Counsel; Gabriella Gomez, Senior Education Policy
Advisor (Higher Education); David Hartzler, Systems
Administrator; Ryan Holden, Senior Investigator, Oversight;
Brian Kennedy, General Counsel; Stephanie Moore, General
Counsel; Alex Nock, Deputy Staff Director; Joe Novotny, Chief
Clerk; Rachel Racusen, Communications Director; Meredith
Regine, Junior Legislative Associate, Labor; Michele Varnhagen,
Labor Policy Director; Michael Zola, Chief Investigative
Counsel, Oversight; Mark Zuckerman, Staff Director; Cameron
Coursen, Minority Assistant Communications Director; Ed Gilroy,
Minority Director of Workforce Policy; Rob Gregg, Minority
Senior Legislative Assistant; Alexa Marrero, Minority
Communications Director; Jim Paretti, Minority Workforce Policy
Counsel; Molly McLaughlin Salmi, Minority Deputy Director of
Workforce Policy; Hannah Snoke, Minority Legislative Assistant;
and Linda Stevens, Minority Chief Clerk/Assistant to the
General Counsel.
Chairman Miller [presiding]. Good morning. The quorum being
present, the committee will come to order.
And before I recognize myself for an opening statement, I
want to note that any member under Rule 12, any member may
submit an opening statement in writing, which will be made part
of the permanent record of this hearing, which is is the
Department of Labor effectively enforcing our wage and hour
laws? And I welcome members to do that, and I want to welcome
our panel.
I recognize myself for the purposes of an opening
statement.
This year in our country, millions of workers will be
robbed of their hard-earned wages. There are many ways for
unscrupulous employers that can cheat a worker out of the wages
that he or she earns. Employers might pay less than the minimum
wage, refuse to pay overtime when employees work more than 40
hours a week or require employees to work off of the clock, and
some employers never pay their employees at all. Simply put,
this is theft, and it is illegal.
No industry or locality is immune from this crime. Wage
theft affects everyone from poultry workers to construction
workers, nursing home employees to retail employees, farm
workers to landscapers. Last month marked the 70th anniversary
of the enactment of the Fair Labor Standards Act, and the FLSA
requires employers to pay their workers at least a minimum wage
and at least time and a half for working overtime. The law also
bans the use of child labor.
Thanks to the Fair Labor Standards Act, the Department of
Labor is armed with many tools to fight wage theft and protect
workers. It can receive and investigate complaints. The
department can target entire industries that habitually violate
the laws for audits and investigations. It can recover back pay
and liquidated damages for employees and obtain civil money
penalties against employers that break the law. And the
Department of Labor can even stop the shipment of goods
produced by law-breaking employers.
The purpose of today's hearing is to examine whether the
federal government is doing enough to stop wage theft. We will
hear directly from the Department of Labor's acting Wage and
Hour administrator about what the agency is doing or not doing
to safeguard hard-earned wages.
This committee has heard frequent reports from workers and
their advocates that the Department of Labor is failing to
effectively advocate on behalf of workers whose wages have been
stolen. These accounts range from the department having weak
enforcement policies to the department having outright aversion
to soliciting workers' complaints.
Unfortunately, the workers most vulnerable to wage theft
are also bearing the brunt of these uncertain economic times.
These families still have to pay rent, mouths to feed, children
to clothe and medicine to buy. For these reasons, I asked the
Government Accountability Office to conduct an investigation
into the effectiveness of the Department of Labor's enforcement
of our wage and hour laws.
Today we will hear the results of two investigations. Both
investigations show the Department of Labor is failing to
adequately prevent or punish wage theft. Although the
Department of Labor currently has the necessary tools to fight
wage theft, the GAO investigation suggests that the problem of
wage theft is only getting worse because of weaker enforcement.
The GAO will highlight the fact that actions initiated by
the department on wage and hour violations have plummeted from
approximately 47,000 in 1997 to fewer than 30,000 in 2007. And
in too many cases, investigators from the Wage and Hour
Division simply dropped the ball in pursuing employers that
cheat their employees out of their hard-earned wages.
We expect to hear recommendations for how the department
can do a better job in enforcing the law. We owe that to all
hard-working Americans to ensure that the federal government
lives up to its responsibility to guarantee that families are
not being cheated out of their wages by bad employers.
I want to again thank the witnesses for being here today,
and I look forward to your testimony.
I would like now to recognize Congressman McKeon, who is
the senior Republican on the Education and Labor Committee.
Prepared Statement of Hon. George Miller, Chairman, Committee on
Education and Labor
Good morning.
This year, in our country, millions of workers will be robbed of
their hard earned wages.
There are many ways an unscrupulous employer can cheat a worker out
of the wages he or she earns. Employers might pay less than the minimum
wage, refuse to pay overtime when employees work more than 40 hours a
week, or require employees to work off the clock. And, some employers
never pay their employees at all.
Simply put, this is theft. And it is illegal.
No industry or locality is immune from this crime.
Wage theft affects everyone from poultry workers to construction
workers, nursing home employees to retail employees, farm workers to
landscapers.
Last month marked the 70th anniversary of the enactment of the Fair
Labor Standards Act. The FLSA requires employers to pay their workers
at least the minimum wage and at least time-anda-half for working
overtime. The law also bans the use of child labor.
Thanks to the FLSA, the Department of Labor is armed with many
tools to fight wage theft and protect workers. It can receive and
investigate complaints. The Department can target entire industries
that habitually violate the law for audits and investigations. It can
recover back pay and liquidated damages for employees, and obtain civil
money penalties against employers that break the law. And, the
Department of Labor can even stop the shipment of the goods produced by
law-breaking employers.
The purpose of today's hearing is to examine whether the Federal
Government is doing enough to stop wage theft. We will hear directly
from the Department of Labor's Acting Wage and Hour Administrator about
what the agency is or is not doing to safeguard hard-earned wages.
This committee has heard frequent reports from workers and their
advocates that the Department of Labor is failing to effectively
advocate on behalf of workers whose wages have been stolen.
These accounts range from the Department having weak enforcement
policies to the Department having outright aversions to soliciting
workers' complaints.
Unfortunately, the workers most vulnerable to wage theft are also
bearing the brunt of these uncertain economic times. These families
still have rent to pay, mouths to feed, children to clothe, and
medicine to buy.
For these reasons, I asked the Government Accountability Office to
conduct an investigation into the effectiveness of the Department of
Labor's enforcement of our wage and hour laws.
Today, we will hear the results of two investigations. Both
investigations show that the Department of Labor is failing to
adequately prevent or punish wage theft.
Although the Department of Labor currently has the necessary tools
to fight wage theft, the GAO investigation suggests that the problem of
wage theft is only getting worse because of weaker enforcement.
The GAO will highlight the fact that actions initiated by the
Department on wage and hour violations have plummeted from
approximately 47,000 in 1997 to fewer than 30,000 in 2007.
And, in too many cases, investigators from the Wage and Hour
Division simply drop the ball in pursuing employers that cheat their
employees out of their hard earned wages.
We expect to hear recommendations for how the Department can do a
better job of enforcing the law.
We owe it to all hard working Americans to ensure that the federal
government lives up to its responsibility to guarantee that families
are not being cheated out of their wages by bad employers.
I thank all of our witnesses for being here today and I look
forward to their testimony.
Thank you.
______
Mr. McKeon. Thank you, Chairman Miller, and good morning.
We are here today to examine the efforts of the U.S.
Department of Labor to enforce our wage and hour laws.
According to its Web site, the Wage and Hour Division's mission
is to promote and achieve compliance with labor standards to
protect and enhance the welfare of the nation's workforce.
Consistent with that goal, the Wage and Hour Division is
responsible for enforcing a wide range of federal labor laws,
from the federal minimum wage, overtime pay, record-keeping and
child-labor requirements of the Fair Labor Standards Act, to a
number of unemployment--employment standards and worker
protections in several immigration-related statutes.
I am pleased that the acting administrator of the Wage and
Hour Division will be testifying today to report directly on
the department's efforts to enforce these important worker
protections and to answer questions about how to continue to
strengthen enforcement in the future. But I would like to take
just a moment to highlight a few statistics that demonstrate
how important this division is.
Since 2001, the Wage and Hour Division has recouped more
than $1.25 billion on behalf of nearly 2 million workers. In
fiscal year 2007 alone, more than 341,000 workers received
recovered back wages thanks to the Department of Labor's
efforts. I look forward to learning more today about how they
are recovering wages and what can be done to ensure strong,
consistent wage protections for workers now and into the
future.
Like all areas of the federal government, the Wage and Hour
Division faces challenges when it comes to recruiting and
retaining qualified professionals to carry out its important
day-to-day activities. We have an aging workforce, with many
baby-boomers nearing retirement. We also have a competitive
private sector that can lure talent and institutional knowledge
away from the federal workforce.
However, despite these challenges, the Wage and Hour
Division still manages to enforce critical labor laws on behalf
of millions of workers in this country. I know there are
dedicated professionals--both political appointees and career
civil servants--who take their responsibilities on behalf of
America's workers very seriously. Some of these professionals
have worked in the Wage and Hour Division for decades, serving
under administrations from both political parties, dutifully
enforcing our labor laws without regard as to who was in the
White House. These individuals work hard, and it would be a
real shame if we were to politicize the work of the Wage and
Hour Division and ignore the contributions of these hard-
working investigators and enforcement officials.
One important measure of the department's success over the
years is its ability to call attention to workers' rights under
federal law. By enforcing the law and using the power of the
bully pulpit to encourage compliance, countless additional
workers have been protected. Employers recognize that
violations will not be tolerated, and still other workers are
made aware of their rights and choose to seek relief through
the court system.
It is worth noting that the department has focused much of
its attention on low-wage workers. This is important because
low-wage workers are often struggling to make ends meet, a
challenge that is even more difficult in the current economic
environment. I am concerned about the plight of all American
workers, who today are paying $4.11 a gallon of regular
unleaded gasoline.
I appreciate the opportunity today to discuss enforcement
of our wage and labor laws, but I would also welcome a
discussion about some of the other pocketbook issues that are,
unfortunately, being ignored. In particular, the burden of the
high cost of gasoline is putting a particular strain on workers
wages. Chairman Miller mentioned many of the things that these
low-quality--low-quality, low-price, low-pay workers are
struggling with, but he did leave out the cost of gasoline, and
that is one of the highest. It is--they have to pay that just
to get to work.
I think it is time that the Congress gets serious about
protecting families and their workers, and I yield back the
balance of my time.
Prepared Statement of Hon. Howard P. ``Buck'' McKeon, Senior Republican
Member, Committee on Education and Labor
Thank you Chairman Miller, and good morning. We're here today to
examine the efforts of the U.S. Department of Labor to enforce our wage
and hour laws.
According to its website, the Wage and Hour Division's mission is
to promote and achieve compliance with labor standards to protect and
enhance the welfare of the nation's workforce.
Consistent with that goal, the Wage and Hour Division is
responsible for enforcing a wide range of federal labor laws from the
federal minimum wage, overtime pay, recordkeeping, and child labor
requirements of the Fair Labor Standards Act to a number of employment
standards and worker protections in several immigration related
statutes.
I'm pleased that the Acting Administrator of the Wage and Hour
Division will be testifying today to report directly on the
Department's efforts to enforce these important worker protections, and
to answer questions about how to continue to strengthen enforcement in
the future. But I'd like to take just a moment to highlight a few
statistics that demonstrate how important this division is.
Since 2001, the Wage and Hour Division has recouped more than $1.25
billion on behalf of nearly two million workers. In FY 2007 alone, more
than 341,000 workers received recovered back wages thanks to DoL's
efforts. I look forward to learning more today about how they're
recovering wages, and what can be done to ensure strong, consistent
wage protections for workers now and into the future.
Like all areas of the federal government, the Wage and Hour
Division faces challenges when it comes to recruiting and retaining
qualified professionals to carry out its important day-to-day
activities.
We have an aging workforce, with many baby boomers nearing
retirement. We also have a competitive private sector that can lure
talent and institutional knowledge away from the federal workforce.
However, despite these challenges, the Wage and Hour Division still
manages to enforce critical labor laws on behalf of millions of workers
in this country. I know there are dedicated professionals--both
political appointees and career civil servants--who take their
responsibilities on behalf of America's workers very seriously.
Some of these professionals have worked in the Wage and Hour
Division for decades, serving under Administrations from both political
parties, dutifully enforcing our labor laws without regard to who is in
the White House. These individuals work hard, and it would be a real
shame if we were to politicize the work of the Wage and Hour Division
and ignore the contributions of these hard-working investigators and
enforcement officials.
One important measure of the Department's success over the years is
its ability to call attention to workers' rights under federal law. By
enforcing the law and using the power of the bully pulpit to encourage
compliance, countless additional workers have been protected.
Employers recognize that violations will not be tolerated, and
still other workers are made aware of their rights and choose to seek
relief through the court system.
It's worth noting that the Department has focused much of its
attention on low-wage workers. This is important because low-wage
workers are often struggling to make ends meet, a challenge that is
even more difficult in the current economic environment.
I'm concerned about the plight of all American workers, who today
are paying $4.11 for a gallon of regular, unleaded gasoline. I
appreciate the opportunity today to discuss enforcement of our wage and
hour laws. But I'd also welcome a discussion about some of the other
pocketbook issues that are, unfortunately, being ignored. In
particular, the burden of the high cost of gasoline is putting a
particular strain on workers' wages, and I think it's time for Congress
to get serious about protecting workers and families.
Thank you, and I yield back.
______
Chairman Miller. Thank the gentleman for his statement.
I would like now to introduce our panel.
Our first witness is Anne-Marie Lasowski, who is currently
the acting director of the GAO's Education, Workforce and
Income Security Issues team, where she leads work on worker
protection issues. In recent years she has led a body of work
on defense trade issues, covering topics such as the U.S.
export control system, foreign military sales, and military
critical technologies.
Alexander Passantino is the acting administrator of the
Department of Labor's Wage and Hour Division. Mr. Passantino--
Passantino, right?
Mr. Passantino first joined the department in November 2005
as a senior policy advisor to the assistant secretary for
employment standards administration.
Kim Bobo is the founder and executive director of
Interfaith Worker Justice, a national organization that
mobilizes religious support for low-wage workers. Since its
founding in 1996, the organization has built a network of more
than 60 religious labor groups around the country and worked on
a variety of economic justice issues.
Gregory Kutz is currently the managing director of GAO's
Forensic Audits and Special Investigations unit. Mr. Kutz has
testified and written investigative reports about the federal
government's handling of Hurricane Katrina and Rita, military
pay problems at the Department of Defense and smuggling of
nuclear materials across our nation's borders, among other
important issues.
Welcome to all of you to the committee, and, again, I want
to thank you in advance for your time and for your expertise.
As you know--some of you have been here before--that, when
you begin talking, there will be a green light in front of you,
and we allow you 5 minutes to make your opening statements so
that we have time for questions. And then with 1 minute to go,
there will be an orange light. You should think about how you
are going to wrap your statement up. And then the red light
comes on, and we would like you to finish your statement at
that time, but we certainly want you to be able to finish it in
a coherent fashion.
So we will begin with you, Ms. Lasowski.
STATEMENT OF ANNE-MARIE LASOWSKI, ACTING DIRECTOR, GOVERNMENT
ACCOUNTABILITY OFFICE, EDUCATION, WORKFORCE AND INCOME SECURITY
ISSUES
Ms. Lasowski. Mr. Chairman and members of the committee, I
am pleased to be here to discuss our recently completed work on
Wage and Hour's efforts to enforce the Fair Labor Standards
Act. As you know, the act protects more than 130 million
workers from substandard wages and working conditions.
We were asked to look at Wage and Hour's efforts to ensure
compliance with the act from fiscal years 1997 to 2007. Today I
will talk about our three key findings: First, the trends in
Wage and Hour's compliance activities, which include
enforcement, partnerships and outreach; second, how effective
it was in planning and conducting its compliance activities;
and, third, whether its efforts improved compliance with the
act.
When we looked at trends over 10 years, we found Wage and
Hour used all three types of its compliance activities, but 81
percent of its efforts were on enforcement actions, and the
remainder was spent on partnerships and outreach. Wage and Hour
defines a range of actions as enforcement, from investigation
to quick conciliations, whereby an investigator will phone the
employer. Mr. Kutz will address these actions in his statement.
Yet despite the high percentage of staff time devoted to
enforcement actions, the number declined by more than a third
over the 10-year period, from 47,000 to 30,000 actions. Agency
officials said there were three reasons for this decline: They
did more comprehensive investigations, which took more time;
they changed the way they screened complaints; and they had
fewer investigators.
The number of investigators fell by more than over 200 over
the 10-year period, or more than 20 percent. The majority of
Wage and Hour's enforcement actions were initiated by
complaints from workers, and most of these were handled through
conciliations.
In the second area we reviewed, Wage and Hour does not use
basic information called for in the Government Performance and
Result Act--or GPRA--guidance to plan or carry out its
compliance activities. Wage and Hour does not have a clear
picture of complaints it receives or complaint backlogs in its
regional and district offices. Not all complaints are recorded,
and offices differ in how they track backlogs.
GPRA says understanding one's external environment is key
to planning. Heavier workloads fall in offices where a state
has weak wage laws or enforcement. Yet headquarters does not
consider this and has allocated about five new investigators to
every region for the most recent years.
GPRA guidance also stresses the importance of obtaining
input from external stakeholders. District office officials
solicit input from external stakeholders, but these meetings
are held after priorities are set at headquarters.
The agency also does not fully use studies it commissioned
and paid for. Researchers identified 33 industries--9 in
particular--where violations are likely to occur. Wage and Hour
officials told us it shifted its focus accordingly. However,
since the completion of those studies in 2004, investigations
of the top 9 have increased only 2 percent.
Wage and Hour has also not sufficiently leveraged available
tools, such as hotlines and partnerships, to encourage
compliance.
Finally, we do not know whether Wage and Hour activities
have improved compliance with the act because Wage and Hour
frequently changes how it measures and reports its performance.
The agency's long-term goals have remained the same over the
10-year period. But of the 131 performance measures it
established, it reported on only 6 of them for longer than a
year.
We are making several recommendations. To improve how Wage
and Hour plans and conducts its compliance activities, we
recommend the agency evaluate its complaint data, use input, as
appropriate, from stakeholders, incorporate findings from its
commission studies and leverage existing tools.
We also recommend Wage and Hour be more accountable by
establishing, maintaining and reporting on its performance
measures.
In conclusion, Wage and Hour is responsible for ensuring
the basic rights of workers, but it does not know how
effectively it is doing so. Given staff reductions, it is
critical for Wage and Hour to use all available information and
tools, and it must consistently measure its results to
determine what works. Basic steps outlined on our
recommendations address these challenges.
Mr. Chairman, this concludes my prepared statement. I would
be pleased to respond to any questions you or other members of
the committee may have.
Thank you.
[The statement of Ms. Lasowski may be accessed at the
following Internet address:]
http://www.gao.gov/new.items/d08962t.pdf
------
Chairman Miller. Thank you.
Mr. Passantino.
STATEMENT OF ALEXANDER PASSANTINO, ACTING ADMINISTRATOR, U.S.
DEPARTMENT OF LABOR, WAGE AND HOUR DIVISION
Mr. Passantino. Thank you, and will my written statement be
made part of the record?
Thank you.
Chairman Miller, Ranking Member McKeon and distinguished
members of the committee, thank you for the opportunity to
answer the question posed by today's hearing: Is the Department
of Labor effectively enforcing our wage and hour laws?
On behalf of the men and women who make up the Wage and
Hour Division, including the deputy administrator for
enforcement and our five regional administrators, who join me
here today--and they are right here in this front row--I
respond with an unqualified yes.
Whether you measure by quality of cases, back wages
recovered, employees receiving back pay or any other meaningful
measure, the Wage and Hour Division's performance has been
improving over the past 10 years. Since 2001, Wage and Hour has
recovered more than $1.25 billion for nearly 2 million workers.
In fiscal year 2007, over 341,000 workers received back
wages, the second-largest number of workers ever behind 2003.
Last year's recovery of wages for workers, $220 million, is the
highest total the agency has ever recorded. This represents a
67 percent increase over back wages recovered in 2001 and is
more than twice the amount collected in fiscal 1997.
In the brief time that we have had the GAO testimony on
FLSA enforcement, numerous senior agency personnel, including
those sitting behind me today, have reviewed the testimony.
Each reviewer has been struck by the fact that, despite having
spent over a year conducting its audit, GAO lacks a fundamental
understanding of so many things about the Wage and Hour
Division.
GAO is wrong about the purpose of the list of the nine
industries, wrong on where independent reports direct us to
focus our resources, wrong on where we should be focusing our
resources, wrong on the value of stakeholder meetings at the
district office level, and wrong on whether district offices
consider complaints in the planning process.
Fundamentally, GAO lacks an understanding of our planning
process and, as a result, underestimates the effectiveness of
Wage and Hour's enforcement activities. GAO describes a process
uninformed by the realities in the field in which Wage and
Hour's national office somehow directs the specific activities
of the district office. This description reflects GAO's failure
to appreciate how Wage and Hour sets its national priorities
and what exactly the term ``national priorities'' represents.
Each year the executive leadership team, which includes the
regional administrators and the deputy regional administrators,
sets broad-based national priorities. Our priorities are based
on detailed research, review of prior year's performance and
the continuous flow of information within the agency, whether
it is an item contained in the various weekly reports or a
conversation between an investigator and a regional
administrator.
Our priorities include broad categorical directives, such
as complaint management, focus on low-wage industries likely to
employ independent contractors and conduct investigations in
agriculture. The specifics related to the directives are
typically completed at the district office level. District
offices hold annual meetings for this exact purpose, and this
local planning is critical to the success of the agency.
As a result of the planning that goes on at the national,
regional and local levels, Wage and Hour has, over the last
several years, devoted between 20 and 30 percent of its
enforcement time, which is approximately 35 percent of all
investigations, to directed investigations in low-wage
industries that employ large numbers of vulnerable low-skill
workers.
Ten years ago Wage and Hour concentrated its low-wage
enforcement priorities in three industries: garment
manufacturing, long-term health care and agriculture. For
several years these were the only industries on which Wage and
Hour could report performance. Moreover, by focusing on these
three industries, Wage and Hour limited the ability of every
district office to fully participate in the agency's focus.
Accordingly, Wage and Hour retained outside contractors to
conduct a low-wage study--a study on low-wage industries. After
several years of research and analysis, in 2004 the contractors
developed a list of 33 national industries in which the data
suggested there was a higher likelihood of minimum wage and
overtime violations.
During the planning cycle for fiscal year 2005, Wage and
Hour shared the list with its managers across the country and
officially expanded its low-wage targeting to encompass the 33
industries, including eating and drinking, hotel and motel,
construction and daycare. The list of 33 industries allowed and
continues to allow regional flexibility in selecting industries
for initiative. Individual offices may even deviate from the
list of the 33 if the office can provide data that supports
their efforts.
As a result, Wage and Hour low-wage initiatives have
resulted in the backwage collections on behalf of gas station
employees in the Northeast, car wash workers in Los Angeles and
New York, security guards in Puerto Rico, restaurant workers in
Chicago and Indianapolis, construction workers in Las Vegas,
day-care workers in Mississippi and Alabama and a host of other
workers nationwide.
Moreover, independent review and analysis of our
enforcement data demonstrates that our managers and
investigators do a remarkable job of targeting local industries
and local employers to find compliance problems.
In addition to enforcement, Wage and Hour has been
aggressive in outreach to worker populations who may be
unfamiliar with labor standards laws and remedies available to
them.
Local Wage and Hour offices have collaborated with
government agencies and advocacy organizations, including
Mexican, other staff and Central American consulates. These
partnerships typically exist in areas with large Hispanic and
Asian populations, and they include justice and equality in the
workplace. Empleo, which started in Los Angeles, and it was
expanded to cover all of Southern California and Las Vegas, the
Reach initiative in New York City, Coach initiative in Northern
New Jersey, Tiger in Houston, and Peace in Kansas City. There
are countless other relationships, both formal and informal,
throughout the country.
During the course of this hearing, we have heard and will
continue to hear about enforcement compliance assistance,
partnerships, penalties, litigation and a host of other issues
related to the operation of the Wage and Hour Division.
Although we have been successful in many ways, I would like to
discuss one success story in particular.
In 1997 and 2000, Wage and Hour compliance surveys of the
poultry-processing industry found violations of overtime
requirements affecting thousands of low-wage workers. In 2002
the Solicitor of Labor filed suit against Perdue, George's
Processing and Tyson's for failing to pay their workers for all
hours worked. That year, Perdue settled with the department and
agreed to pay over $10 million to over 25,000 employees and
also agreed to comply with the Fair Labor Standards Act in the
future.
Following the Supreme Court's decision in IBP vs. Alvarez,
the Wage and Hour Division again advised poultry processors of
their obligations under the Fair Labor Standards Act. In May
2006 George's Processing settled with the department by
agreeing to pay more than $1.2 million to more than 5,000
employees. George's also agreed to future compliance.
The department's lawsuit against Tyson, which was filed in
2002, is ongoing.
The success of the poultry-processing litigation
demonstrates the careful balance we must deal with each day. We
must weigh the benefits of prompt payment to employees against
the benefits of enhanced penalties against employers.
Chairman Miller. Mr. Passantino, I am going to ask you to--
if you can wrap up.
Mr. Passantino. Last paragraph.
Chairman Miller. Yes.
Mr. Passantino. It is not an easy answer, and there is no
one-size-fits-all solution.
For 70 years, Wage and Hour has had a strong record of
enforcement on behalf of workers in this country. For the past
2\1/2\ years, it has been my honor and privilege to serve
alongside the dedicated and committed staff of professionals,
who strive to carry out the agency's mission, to promote and
achieve compliance with labor standards, to protect and enhance
the--the welfare of the nation's workforce. We believe that we
have achieved significant results for workers, and we will
continue towards this end.
Mr. Chairman, this concludes my prepared remarks. I will be
happy to answer any questions that you or the members of the
committee have.
[The statement of Mr. Passantino follows:]
Prepared Statement of Alexander J. Passantino, Acting Administrator,
Wage and Hour Division, U.S. Department of Labor
Chairman Miller, Ranking Member McKeon, and distinguished members
of the Committee: Thank you for the opportunity to discuss the record
of the Department of Labor's Wage and Hour Division (WHD) in enforcing
the nation's wage and hour laws. For seventy years, WHD has had a
strong record of enforcement on behalf of workers in this country. In
the two and one-half years of my tenure with this agency, it has been
my honor to serve with the dedicated and committed staff of
professionals who all strive to carry out the agency's mission ``to
promote and achieve compliance with labor standards to protect and
enhance the welfare of the nation's workforce.''
As you know, WHD is responsible for enforcing some of our nation's
most comprehensive federal labor laws including the minimum wage,
overtime pay, recordkeeping, youth employment and special employment,
family and medical leave, migrant worker protections, lie detector
tests, worker protections in certain temporary worker programs, and the
prevailing wages for government service and construction contracts. WHD
is first and foremost an enforcement agency, and its record recoveries
on behalf of the workers in this country are a testament to the
importance that the agency places on its law enforcement
responsibilities.
Like all regulatory enforcement agencies, WHD employs a variety of
tools and activities to enforce the law and achieve compliance. For
example, WHD responds to complaints, initiates directed (i.e.,
targeted) cases, engages in educational and other outreach activities,
and assesses penalties against violators. Each fiscal year, we review
our results, and, based on, among other things, the extensive knowledge
and expertise of our field personnel, undertake extensive operational
planning for the coming year. Our annual planning process considers our
available resources (current and anticipated), legislative and
regulatory changes (recent and anticipated), demographic shifts, recent
events (e.g., Hurricanes Katrina and Rita), information from other
government agencies and our non-government partners, studies and
reports by outside consultants, and input from stakeholder groups.
Priorities are set on a national, regional, and district office
level, with input from individuals at all levels of the organization.
Indeed, district offices hold annual meetings for the specific purpose
of preparing the following year's plan. This local planning is critical
to the success of the agency--targeting strategies that may be
successful in Des Moines, Iowa, for instance, are not necessarily
effective in Brooklyn, New York. Once each plan is finalized and
approved, it is carried out by the local management teams, support
staff, and, of course, investigators.
Wage and Hour investigators are extensively trained, receiving both
classroom and field training before being permitted to officially
conduct an investigation on behalf of the agency. Many speak two or
more languages. They are sworn law enforcement officers who carry
badges and take seriously their responsibility to faithfully enforce
the laws for which WHD has responsibility.
In addition to careful and rigorous annual planning, WHD has sought
to become more efficient in enforcement. Field offices have emphasized
complaint intake strategies that screen incoming calls and
correspondence to ensure that the issue is properly within WHD's
enforcement jurisdiction. In FY1997, some 36 percent of all cases
handled by WHD resulted in a finding of no violation. By FY2007, WHD
had reduced the percentage of no violation cases by nearly half--to 19
percent.
Over the last several years, WHD has generally devoted between 20
to 30 percent of its enforcement time--or approximately 35 percent of
all investigations--to directed (or targeted) investigations in low-
wage industries that employ large numbers of vulnerable low-skilled
workers. Let me emphasize that these are investigations initiated by
WHD and are not in response to complaints. Ten years ago, WHD
concentrated its low-wage enforcement priorities in three industries--
garment manufacturing, long-term health care, and agriculture. As we
all know, the workplace has changed in the last ten years, and WHD has
seen compliance problems grow in other low-wage industries even while
the agency's resources were focused on the three national priorities.
To combat this trend, WHD expanded its low-wage targeting to encompass
a broader range of 33 industries, including eating and drinking, hotel
and motel, construction, and day care. The 33 industries are those in
which an external evaluation of data suggested there was a higher
likelihood of minimum wage and overtime violations.
WHD's compliance efforts and successes in low-wage industries, such
as garment manufacturing, health care, and poultry processing are well-
documented and demonstrate the positive effect of the agency's
strategies on employer behavior. In FY2005, WHD completed an
investigation-based compliance survey of garment manufacturers in the
two major garment areas of Los Angeles and New York City. The Los
Angeles results demonstrated a 14 percentage point increase in
compliance over the FY1994 baseline. In New York City, minimum wage and
overtime compliance among garment contractors increased 17 percentage
points between 2001 and 2004 and 32 percentage points over the baseline
measure in 1997.
In the long-term health care industry, 2004 compliance surveys also
documented marked improvements in compliance. The compliance rate for
the nursing home industry increased by 16 percentage points between
2000 and 2004. Nearly 90 percent of employees were found to be paid in
compliance. In the residential care industry, compliance increased by
13 percentage points between 2001 and 2004. Ninety-five percent of the
employees were found to be paid in compliance with the minimum wage and
overtime provisions of the Fair Labor Standards Act (FLSA).
Compliance surveys of the poultry processing industry in 1997 and
2000 found violations of overtime requirements affecting thousands of
low wage workers. In an effort to promote compliance in this industry,
in 2002, the Solicitor of Labor filed suit against Perdue, George's
Processing, and Tyson for failing to pay their workers for all hours
worked, including time spent donning and doffing protective gear and
related walking time. In 2002, Perdue settled with the Department and
agreed to pay over $10 million to over 25,000 employees who worked at
their plants between 2000 and 2002. Perdue also agreed to comply with
the FLSA in the future by recording and paying workers for all hours
worked.
Following the November 2005 Supreme Court decision in IBP v.
Alvarez, WHD again advised poultry processors of their obligation to
pay their employees who work in meat and poultry processing plants for
the time they spend donning and doffing gear, as well as for the time
they spend walking between the place where they put on and take off
protective equipment and the place where they process the meat or
poultry. In May 2006, George's Processing settled with the Department
by agreeing to pay more than $1.2 million to more than 5,000 employees
for donning and doffing violations and agreed to future compliance. The
Department's lawsuit against Tyson is ongoing. In August 2007, the
Department filed a lawsuit against Pilgrim's Pride, the largest poultry
processor, in district court in Dallas, Texas, seeking back wages for
workers at the Dallas facility and a nationwide injunction.
It is clear that over the last seven years WHD has maintained its
long-standing goal of increasing compliance in these initially targeted
low-wage industries, while expanding its focus on other industries. WHD
low-wage initiatives have resulted in back wage collections on behalf
of gas station employees in the northeast, car wash workers in Los
Angeles and New York, security guards in Puerto Rico, restaurant
workers in Chicago and Indianapolis, construction workers in Las Vegas,
day care workers in Mississippi and Alabama, and a host of other
workers nationwide.
In addition to its enforcement in low-wage industries, WHD has been
aggressive in outreach to worker populations who may be unfamiliar with
labor standards laws and the remedies available to them. Local WHD
offices have developed, or have been a catalyst in developing,
compliance initiatives designed specifically to ensure that low-wage
workers are employed in compliance with labor statutes. Initiatives
involve collaborations with government agencies and advocacy
organizations, including Mexican and other South and Central American
Consulates to which immigrant workers often turn for assistance.
The first compliance partnership programs began in areas with large
Hispanic and Asian populations--Houston, Dallas, Las Vegas, and Los
Angeles. The Justice and Equality in the Workplace Program--established
in Houston in 2001 to educate Spanish-speaking low-wage workers and
their employers about the law--has been a model for other compliance
initiatives with similar objectives, such as the EMPLEO (Employment
Education Outreach) initiatives in Southern California and Las Vegas.
Other programs, like the REACH (Rapid Employer Assistance Chinese
Hotline) in New York City, COACH (Compliance Outreach to the Asian
Community and Hispanics) in Northern New Jersey, and TIGAAR (The
Information Group for Asian American Rights) in Houston, work to
increase knowledge of WHD laws and services among workers in the Asian
and Hispanic communities and among new and small business owners.
As a result of these and countless other efforts by the agency, WHD
has recovered more than $1.25 billion for nearly two million workers
since 2001. In FY 2007, over 341,000 workers received recovered back
wages--the second largest number of workers since 1993, and the amount
of wages recovered for workers--$220,613,703--is the highest total the
agency has ever recorded. This represents a 67 percent increase over
back wages recovered in 2001, and is more than twice the amount
collected in fiscal year 1997.
In fact, WHD total back wage collections for the last seven fiscal
years represent a 28 percent increase over the back wage collections
for the seven fiscal years beginning in 1994 and ending in 2000. During
this same time period, WHD also increased by 10 percent the number of
workers for whom it collected back wages. WHD achieved these important
successes despite limited staff levels.
There is no question that WHD's staff levels have been declining.
As with all federal agencies, experienced personnel have retired and
others have left federal service to pursue private employment. WHD's
authorized full time equivalent (FTE) levels have declined from 1,528
in fiscal year 2001 to 1,208 in fiscal year 2008. On-board investigator
levels have declined from 945 in 2001 to 725 today. This decline is
similar to the period from 1990 to 1996, when investigator levels
decreased from 938 to 781. Today, WHD finds itself in that situation
again.
We believe we have achieved significant results for workers, and we
will continue toward this end.
Mister Chairman, this concludes my prepared remarks. I will be
happy to answer any questions that you or the Members of the Committee
may have.
______
Chairman Miller. Thank you.
Mr. Kutz.
STATEMENT OF GREG KUTZ, MANAGING DIRECTOR, GOVERNMENT
ACCOUNTABILITY OFFICE, FORENSIC AUDITS AND SPECIAL
INVESTIGATIONS
Mr. Kutz. Mr. Chairman and members of the committee, thank
you for the opportunity to discuss the Department of Labor's
investigations of wage and hour complaints. As you have heard,
Labor has established a Wage and Hour Division, whose mission
is to protect our nation's workforce.
Today's testimony highlights 15 closed cases that show
inadequate investigations of worker complaints. As you
requested, we plan to continue our work in this area to
determine whether these cases are indicative of systemic
problems.
The cases we investigated relate to low-wage workers. Their
complaints related primarily to not being paid minimum wage or
overtime, not receiving their final paycheck or, in some cases,
not being paid at all. These workers included cashiers, cooks,
painters, plumbers, security guards and truck drivers. These
cases are from states across the country, including California,
Florida, Maryland, Ohio, Texas and Virginia.
For these 15 cases, we found that Labor's investigations
were inadequate. In some cases, very little effort was expended
before a case was closed. In other cases, the case was closed
because the 2-year statute of limitations was about to expire.
Here are a few examples of what we found: First, a child-
labor complaint was closed because an employer could not be
found. We easily identified this employer through a public-
records search and a telephone call.
In another case, an employer admitted that wages were due
but told the investigator to call back later. After subsequent
phone calls were not returned, the investigator closed the
case.
One case was assigned to an investigator 17 months after it
was received. After the investigator held this case for 6
additional months, it was closed.
And, finally, one case was closed after an employer
represented to an investigator that their revenue was below the
$500,000 threshold, where federal law applies. In a subsequent
civil case, these representations were proven false and the
employer settled with these employees for an undisclosed
amount.
The most troubling cases to me are the ones where labor
records indicate that wages were in fact due. Rather than
pursue payment, Labor closed these cases and informed these
individuals of the right to file a lawsuit. Examples of
individuals informed of this right to file a lawsuit include a
homeless person owed thousands of dollars, a gas station
cashier owed a final paycheck, a garment worker whose employer
was found by Labor to owe her and 23 other works $60,000 and a
painter whose employer refused to pay legally due wages because
he and others were not U.S. citizens.
The poster board in the picture on the monitor shows an
example of one of these letters that Labor sent to one of our
case-study individuals. Note that in this case you see the
employer refused to pay back wages that were due. However, the
next sentence says that no further action will be taken.
Imagine how this individual felt after reading at the bottom of
the letter that Labor is--and I quote--``working to improve the
lives of America's workers.''
This and other letters also inform individuals of the
right, as I mentioned, to file a lawsuit. It is hard to believe
there are a lot of attorneys looking to work low-dollar,
minimum wage and last-paycheck cases. And even if there were,
these people certainly couldn't afford to pay them.
In conclusion, I can't tell you whether these cases are
isolated or whether they are the tip of the iceberg. However,
what is clear is that in several cases employers got away with
labor-law violations with no consequences. If Labor's mission
is truly to protect our nation's workforce, these cases
indicate they have a ways to go.
Mr. Chairman, that ends my statement. I look forward to
your questions.
[The statement of Mr. Kutz may be accessed at the following
Internet address:]
http://www.gao.gov/new.items/d08973t.pdf
------
Chairman Miller. Thank you.
Ms. Bobo.
STATEMENT OF KIM BOBO, EXECUTIVE DIRECTOR, INTERFAITH WORKER
JUSTICE
Ms. Bobo. Thank you for allowing me to testify.
My name is Kim Bobo. I am the director of Interfaith Worker
Justice. We run a network of 19 worker centers around the
country, where workers who haven't gotten paid come for help.
The number-one problem we see is wage theft, workers are
not getting paid. Out of this, I have just finished a book that
is being published this fall on wage theft, and I have to tell
you it is a national crisis at this moment in our nation. Two
to three million workers aren't paid minimum wage. Three
million workers are misclassified. Estimates are that millions
are illegally denied overtime pay. Billions of dollars are at
stake every year.
So if the question is is Wage and Hour doing important
work, then the answer is yes. Is the question are there
dedicated Wage and Hour staff who are hard working, then,
absolutely, the answer is yes. But if the question is, is the
Department of Labor effectively enforcing our wage and hour
laws ?, are they stopping and deterring wage theft ?, then the
answer must be a resounding no.
Let me offer five recommendations for strengthening the
Wage and Hour Division. First, we need to develop a community
policing model. Local police forces have found that they have
got to create partnerships. We have been a part of some of the
partnerships that Wage and Hour has developed, but they have
inadequate staff and resources. Let me give you an example.
A couple years ago we started a worker center in Houston.
When we got there, we saw all the billboards around advertising
the partnership that Wage and Hour Division had developed, and
the billboards had phone numbers you could call if you had a
wage and hour violation. The problem was no one would answer
the phone. So you had this entire effort with no one staffing
the phone. Eventually we got permission to answer the phone,
but it was not an adequate situation.
I heard last week from our worker center in Northwest
Arkansas that they had sent over to the Wage and Hour Division
60 wage complaints that they thought were legitimate. Two of
them were investigated; one resulted in back wages. Now, maybe
we didn't get all the information we needed, but we need to
work together to figure out how to collect these back wages.
Second recommendation, we need to devote 50 percent of the
Wage and Hour Division's staff and resources to targeted
investigations. Most of the work right now, because of the
limited resources, is done by investigators answering the phone
and trying to call the employer and get things settled. It is
not sufficient. We need to figure out these industries and
devote half of the resources to doing investigation.
In 1941 the division conducted more than 48,000 on-site
investigations. They inspected 12 percent of the establishments
covered by the law. Today there are 30,000 enforcement actions,
and half of them are simply phone calls to the employers. That
is about a third of 1 percent of workplaces have any action
whatsoever.
Third recommendation, we must punish those who steal wages
in meaningful ways. Usually, the worst thing that will happen
to an employer who does not pay a worker's wages is that they
have to pay the back wages that should have been paid in the
first place. More often, the employer will pay less than was
actually owed.
Now, Mr. Passantino just suggested that it is a trade-off
between prompt payment versus penalties. I would suggest to you
today that, if we do more rigorous penalties--using liquidated
damages, fines, interest--and if we do this consistently and we
publicize it regularly that we will more often get prompt
payment. It is not an either/or that, if we do penalties, it
will force prompt payment on a more regular basis.
Four, we must experiment with new educational enforcement
approaches. This includes more pilot projects with these worker
centers that are on the ground working, exploring creating one-
stop centers for workers to come find out about not only Wage
and Hour but OSHA problems, and also to create some joint task
forces between Wage and Hour, particularly to focus on
industries that are known to both steal wages and injure
workers.
Finally, we have got to increase the number of enforcement
staff and the attorneys devoted to Wage and Hour compliance. No
matter how effectively the division uses its resources, it
can't do the job with only 750 enforcement staff around the
country to protect 130 million workers. It is not enough.
And when there are cases filed, you have got to have
attorneys that are going to back them up. Last year there were
7,000 FLSA cases filed in federal court. The Department of
Labor only did 151 of those. The Department of Labor needs to
back up its investigators by taking employers to court.
Wage theft is bad for America. It hurts workers, its places
ethical employers at a competitive disadvantage, it robs
resources from the public coffers, and it denies communities of
the economic stimulus.
Chairman Miller. Ms. Bobo----
Ms. Bobo. Thank you very much.
[The statement of Ms. Bobo follows:]
Prepared Statement of Kim Bobo, Executive Director, Interfaith Worker
Justice
Thank you for allowing me to testify.
My name is Kim Bobo. I am the Executive Director of Interfaith
Worker Justice, a position I've held since 1996 when a group of 45
religious leaders and I founded the organization. We are a national
network of 60 local affiliates that engage the religious community in
issues and campaigns to improve wages, benefits and working conditions
for workers, especially workers in low-wage jobs. We coordinate 19
workers centers that are drop-in centers for workers who are having
serious wage or health and safety problems in their workplaces.
Last week I finished a book that will be published this fall on
wage theft. The book grows out of the experiences our workers centers
have had with wage theft. There are approximately 200 workers centers
around the country, including the 19 affiliated with Interfaith Worker
Justice. The number one problem addressed by these centers is wage
theft. Wage theft has become a national crisis, and yet most Americans
with whom I talk are surprised to learn the scope and breadth of the
problem.
If the goal of Wage and Hour's labor law enforcement is to stop and
deter wage theft, then the answer to the question posed by this
hearing, ``Is the Department of Labor Effectively Enforcing Our Wage
and Hour Laws?'' is a resounding ``NO.''
As a nation, we face a crisis of wage theft.
Two million workers aren't paid the minimum wage.\1\
Three million are mis-classified as independent
contractors instead of employees.\2\
Millions more are illegally denied overtime pay.\3\
Millions of workers are having wages stolen each and every year.
Workers are confused by the laws and unsure about which agencies can
help them. Employers understand that the consequences of stealing wages
are negligible. Wage stealers have no fear. The general public doesn't
understand there is a crisis. Consequently, one must conclude that the
Wage and Hour Division is failing to protect workers from wage theft
because of its woefully inadequate enforcement of the federal wage and
hour laws.
Unlike many issues that face our nation, stopping wage theft is not
that complicated of a problem to solve. There are many of us who are
willing to help--the religious community, ethical businesses and trade
associations, unions and workers centers. But we can't do it by
ourselves. We need a strong Wage and Hour Division of the Department of
Labor that works collaboratively with all of us to protect workers from
wage theft and enforce the nation's labor laws.
Interfaith Worker Justice offers five recommendations for
strengthening the Wage and Hour Division: It must:
1) Develop a community policing model for wage enforcement. Local
police forces learned years ago that the most effective way to stay
abreast of community problems is to involve the community in addressing
problems. Police who attempt to enforce the laws in their precincts
without working collaboratively with community residents are bound to
fail.
Although the Wage and Hour Division has a number of formal
community collaborations, such as JEWP in Houston and Dallas and EMPLEO
in Las Vegas and Los Angeles, our experience around the country is that
these partnerships are inadequately staffed and fail to take advantage
of the possibilities these partnerships could provide. In addition, the
Division does not consistently work with community partners, refuses to
involve workers and advocates in helping gather information for
supporting cases, ignores recommendations for targeted investigations,
and sometimes won't even return our phone calls. Last week I heard the
Director of our Northwest Arkansas Workers Center say that she and her
colleagues had sent the Wage and Hour Division 60 wage complaints. Two
were investigated and one resulted in back wages to workers. If the 58
other complaints we submitted did not have adequate information or were
deficient in some other way, we should discuss it and figure out what
can be done together to recover wages for workers.
The Wage and Hour Division can't operate as if it can stop wage
theft all by itself. It cannot. It needs to work with the community,
but it must commit to working with them in meaningful ways. Complaints
generated must be quickly addressed. Worker advocates must be trusted
and treated as allies. New approaches for targeting and enforcement
should be tried and evaluated. Enforcement actions should be publicized
to deter further wage theft. The Wage and Hour Division must be both
transparent and accountable in appropriate ways.
2) Devote 50 percent of the Wage and Hour Division's staff and
resources to targeted investigations. The Division should focus at
least half of its resources on targeted investigations that have the
possibility of recovering significant back wages for tens of thousands
of workers in low-wage jobs, punishing those employers who
systematically and willfully violate the nation's labor laws and
bringing entire industries into compliance with the labor laws. When
the agency primarily responds to complaints, it doesn't have much
chance of changing the behavior of entire industries because employers
will (rightly) gamble that only a small percentage of workers will have
the courage to complain, given a tight labor market. In contrast, if
entire industries are investigated, back wages collected and meaningful
penalties levied, the industries known to steal wages will be
challenged to change their business practices.
In 1941, when the Division began monitoring the 360,000 workplaces
it was responsible for monitoring, it conducted more than 48,000 on-
site investigations. The Wage and Hour Division physically inspected 12
percent of the establishments covered by the law.\4\ Today, the agency
conducts only 30,000 ``enforcement actions'' and approximately half of
those ``actions'' are simply phone calls to an employer. In 2007, the
Wage and Hour Division only devoted 23 percent of its resources to
targeted inspections,\5\ compared to 30 percent in 2000,\6\ 60 percent
in 1968 \7\ and more than half in 1941. Raising this percentage will be
almost impossible to do without more enforcement staff for the Wage and
Hour Division. The Secretary of Labor should fight for more staff over
a six year time period and the percentage of investigators focused on
investigations should increase from its current level to 50 percent of
investigators' time devoted to targeted investigations.
3) Punish those who steal wages in meaningful ways. In the vast
majority of situations, the worst thing that will happen to an employer
who does not pay a worker for all the hours worked is that the employer
will have to pay back the wages that should have been paid in the first
place. Often, the employer will pay the worker less than the worker
should have earned because the Division only recovered wages for a two-
year period and the wages may have been stolen for longer periods, or
the case took so long to settle that the recovery amount was
diminished, or the enforcement staff wasn't sure its case was strong or
that the Solicitor's office would back it up, so the staff settled for
lower amounts of wages than may have been owed. As a result, those who
steal wages come out better off than if they had obeyed the law.
If my organization doesn't pay its payroll taxes, I know that the
IRS could take my house. I know that if I park in a no parking zone, I
will get a fine and have my car towed, an expensive proposition in
Chicago. Meaningful consequences deter crime, including wage theft.
The Wage and Hour Division has a variety of tools at its disposal
for punishing unethical employers who steal wages, but does not
consistently use them, even against employers who willfully and
repeatedly steal wages, nor does it publicize either those who steal
wages or the consequences it imposed as means for deterring others from
stealing wages. In 2006 and 2007, the Wage and Hour Division issued
civil money penalties (CMP) ``fines'' against fewer than half of
companies that were found to have either repeat or recurring violations
and almost half of those fined were for child labor violations, not
minimum wage or overtime violations.\8\ In reviewing 294 consent
decrees (court settlements) that were entered from 2002 to 2006 in
federal court cases brought by the Secretary of Labor that resulted in
payment of FLSA back wages, only 28 cases (9.5 percent) were awarded
CMPs and only 66 cases (22.4 percent were awarded liquidated damages
(double wages). These were cases that had to be taken to court because
the employers would not pay workers quickly, and still the attorneys
representing the Department of Labor did not routinely press for CMPs
and liquidated damages.
Some might argue that the laws are confusing and so employers
shouldn't be punished. Although I admit that some of the overtime
issues can be confusing despite many efforts to clarify who is exempt
and who isn't, nonetheless if employers knew that there were serious
consequences for noncompliance, employers would focus more on
understanding the rules. And the second time an employer violates the
same law, the consequences should be very serious.
The Wage and Hour Division should consistently seek:
Liquidated damages (double wages).
Interest on the wages owed.
Civil money penalties (fines).
Debarment from government contracts of companies that
steal significant amount of wages or steal wages willfully or
repeatedly.
In addition, the Division should maintain a list on line of all
those who have stolen wages from workers and publicize every settlement
in local papers, both to publicize the bad behavior, which deters other
wage theft, and to encourage other workers to file complaints. All of
these things could be done with no legislative changes.
If these punishments aren't sufficient, the agency should seek the
authority to extend the look back period, increase the civil money
penalties, and mandate certain penalties.
4) Experiment with new educational and enforcement approaches. The
Wage and Hour Division is not adequately protecting workers from wage
theft and consequently it must try some new approaches. Interfaith
Worker Justice recommends that the Division:
Create pilot projects, in collaboration with workers
centers and other worker advocates to conduct educational outreach and
enforcement activities targeted on selected industries known for
stealing wages. These collaborations must be built upon transparency
and accountability.
Explore creating one-stop centers to address workplace
problems where the alphabet soup of agencies, Wage and Hour, OSHA,
EEOC, Worker Comp and State agencies could collaborate to help workers
address workplace problems. These centers would be modeled on the one-
stops the DOL created for job training.
Create at least three joint Wage and Hour and OSHA
taskforces to collaborate on protecting workers in industries like
poultry and construction that are known for both wage violations and
health and safety problems.
5) Increase the number of enforcement staff and attorneys devoted
to wage and hour compliance. No matter how effectively the Division
used its resources and enforcement tools, it could not possibly protect
the nation's workers against wage theft and reasonably deter more wage
theft without more enforcement staff and attorneys to back them up. The
Wage and Hour Division has many dedicated, hard-working career staff,
but 750 enforcement staff cannot protect 130 million workers against
wage theft when stealing wages has become common practice in many
industries.
The most comprehensive law the Wage and Hour Division enforces is
the Fair Labor Standards Act, passed in 1938. It took a few years to
get the Wage and Hour Division up and functioning, but by 1941 the
Division had hired, trained and deployed 1500 field staff around the
country inspecting workplaces covered by the Fair Labor Standards Act.
That 1500 number is double the current enforcement staff, despite the
fact that the current Wage and Hour staff is responsible for enforcing
many more laws and protecting eight times as many workers employed in
20 times more workplaces.
Using the 1941 ratio of investigators to workers covered by wage
and hour laws, the Wage and Hour Division would need more than 12,500
investigators. Using the 1941 ratio of investigators to workplaces
covered, the Wage and Hour Division would need 34,000 investigators.
Clearly having only 750 wage and hour investigators protecting the
nation's workers against wage theft is inadequate. So what's the right
number?
The best estimate of the number of investigators needed today must
start with the premise that the Wage and Hour Division should attempt
to maintain the 1941 ratio of investigators to workers. The Division's
mission is to protect workers; the number of workplaces does not
significantly impact investigator workload. If instead of using the
1941 figures for comparison we use the 1962 figures, we find a similar,
albeit slightly less dramatic, need for more staff. Using the ratio of
investigators to workers covered by wage and hour laws, the Wage and
Hour Division would need over 7000 investigators. Using the 1962 ratio
of investigators to workplaces covered, the Wage and Hour Division
would need almost 10,000 investigators. Either calculation suggests the
Division needs significantly more staff to be able to stay abreast with
the enforcement responsibilities assigned to it. Because of the
improved productivity that should be available to investigators from
cellphones, computers and other technology, the ratio of investigators
to workers could certainly be lower and still be effective in combating
wage theft. Interfaith Worker Justice recommends that the agency
quadruple its enforcement staff over the next six years in order to
effectively stop and deter wage theft.
An additional challenge to immediately adding thousands of new
investigators is the Wage and Hour Division's capacity to adequately
train a large number of new investigators without bringing the agency's
work to a halt. Quadrupling the agency's staff would be an overwhelming
training challenge. Given the departure over the last few years of many
dedicated career staff leaders with decades of experience, perhaps a
strong team of retirees could be recruited to oversee the intensive
training and mentoring program for new investigators.
Given the crisis of wage theft in the nation, the huge
responsibility for protecting the nation's workers and deterring wage
theft, and the critical Wage and Hour Division rebuilding needs, the
following is a modest and reasonable recommendation:
Immediately add three new investigators, two new assistant
investigators, and one new administrative staff person for each of the
74 District and Area Offices. The majority of these investigators need
to be bilingual. This would require each office to train and orient six
new staff people. This is challenging, but possible, bringing the total
number of new staff focused on investigations to 444. If there are
significant backlogs in one region compared to another, the staff
allocations could be shifted to address the backlogs. This would cost
approximately $25 million.
Immediately add 25 professional staff in the national Wage
and Hour Division headquarters to coordinate national surveys, national
industry initiatives, worker outreach programs, work with state
agencies and other new and expanded initiatives. This would cost
approximately $3 million.
Over the next five years, continue to add additional
investigative staff at this pace, adding 444 divided in an appropriate
manner among the 74 District and Area offices. At the end of six years,
this process would add 2664 new field staff.
The additional costs would be at least partially covered by
additional civil money penalties paid directly to the U.S. Treasury.
Assign at least half the total investigators (222 new and
375 experienced investigators) to targeted investigations focused on
low-wage industries known to steal wages from workers. Please note that
it is important that the Division not evaluate itself completely based
on total dollar amounts recovered for workers, because the greatest
dollar amounts recovered will almost always be from upper middle-class
workers who have been denied overtime. These cases are ones that the
private bar is willing and interested in representing because of the
potential high dollar amounts involved. The cases that the private bar
are not interested in, and thus the ones the Department of Labor should
focus on, are the workers in low-wage jobs whose stolen wages may not
seem like huge dollar amounts, but are significant to those workers'
families. The Department of Labor should focus its targeted
investigations on industries such as agriculture, restaurants, day
labor, residential construction, and garment manufacturing.
Using this approach, the agency could rebuild its enforcement
capacity, successfully train and mentor new investigators, and return
to having at least half the staff devoted to targeted investigations.
In addition to adding enforcement staff, primarily in field offices
around the nation, there must be enough attorneys in the Solicitor's
Office to back up the work of the investigators. In 2007, there were
7310 cases filed in federal courts under the Fair Labor Standards Act.
Only 151 cases were filed by the Department of Labor.\9\ No matter how
well an investigator pursues a case, it will be meaningless if the
ultimate threat of taking the employer to court is not used regularly
and aggressively.
As a nation, we know that if something is a priority, we do it. If
fighting wage theft is made a priority, we will find the resources to
hire enforcement staff.
Fighting wage theft in the nation must become a priority for the
Secretary of Labor and the Wage and Hour Administrator. New approaches
must be developed and additional resources sought.
The American public will support efforts to stop wage theft.
Collectively we believe that workers should be paid for all the work
and that stealing is wrong.
Wage theft is bad for America. It hurts workers and their families,
places ethical employers at a competitive disadvantage, robs resources
from public coffers in unpaid taxes, and denies communities of the
economic stimulus provided by wages spent in local communities. Wage
and Hour's role is absolutely essential in restoring wages to workers,
fairness to ethical businesses, monies to the public coffers and
economic resources to communities. Wage theft is wrong. It should be
stopped.
Thank you for this opportunity to testify.
ENDNOTES
\1\ The Urban Institute, Immigration Studies Program, A Profile of
the Low-Wage Immigrant Workforce, November 2003. This figure of two
million is based on this report profiling low-wage immigrant workers,
which found that 13 percent of foreign-born female workers and 9
percent of foreign-born male workers are paid less than minimum wage.
Based on immigrant workers alone, there are more than two million
workers earning below minimum wage.
\2\ Government Accounting Office, Employee Misclassification:
Improved Outreach Could Help Ensure Proper Worker Classification
(Washington, D.C.: U.S. Government Accountability Office), May 2007.
\3\ There are no comprehensive studies documenting the precise
numbers affected by unpaid overtime, but 85 percent of FLSA violations
were related to overtime and almost all the large FLSA lawsuits filed
are for overtime violations. Mis-classifying workers as exempt when
they are really non-exempt and mis-classifying workers as independent
contractors when they are really employees are both widespread
practices that deny workers overtime.
\4\ Wage and Hour Division, Annual Report, Wage and Hour Division,
1941.
\5\ Interfaith Worker Justice, Working on Faith: A Faithful
Response to Worker Abuse in New Orleans, 2007.
\6\ USDOL, Wage and Hour Division, 1999-2000 Report on Initiatives,
February 2001, page 11.
\7\ USDOL 1968 Budget Estimate, Volume II, 90th Congress, First
Session, WJ-14.
\8\ 49 percent in 2007 and 48 percent in 2006 according to data
provided in the DOL FOIA letter to me (Kim Bobo) daed May 1, 2008.
\9\ James C. Duff, Judicial Business of the United States Courts:
2007 Annual Report of the Director (Washington, D.C.: Administrative
Office of the U.S. Courts), Table C-2A.,??
______
Chairman Miller. Thank you.
Under a previous agreement, the chair will have 10 minutes
and the senior Republican will have 10 minutes in the opening
questioning.
As I understand the testimony in the GAO report--and I
think--I just want to establish this as a base. On page 7, Ms.
Lasowski, in your statement you state a majority 72 percent of
the Wage and Hour Division's enforcement actions were initiated
in response to complaints from workers. From 2000 to 2007, more
than half the enforcement actions--approximately 52 percent--
were conciliations, which Wage and Hour Division conducted over
the phone. Is that agreed upon? I mean, is that a benchmark
here?
Mr. Passantino, does that sound right to you?
Mr. Passantino. That is approximately.
Chairman Miller. Excuse me?
Mr. Passantino. That is approximately right. I don't know
the specifics for each year, but that seems about in the
ballpark.
Chairman Miller. You go on in to point out the question of
whether or not these complaints are then--Mr. Kutz has a
different problem with these phone complaints--but you suggest,
if I am reading it correctly, Ms. Lasowski, that these
complaints are sort of handled as they will be but there is
really no data developed about what is taking place and how
they might be used to further the mission of the Wage and Hour
Division. Is that a fair reading, and can you explain that?
Ms. Lasowski. Yes, Mr. Chairman. In terms of what we said
about complaints, we indicated that it is really up to the
discretion--based on their field office handbook--as to whether
or not a complaint is actually put into its database system.
And not all complaints are recorded. Wage and Hour has the
discretion, for example, based on workload and travel resources
to screen out a complaint before entering it into the database.
They have indicated that----
Chairman Miller. Screen? What do you mean by screen out a
complaint?
Ms. Lasowski. That they do not record all complaints into
their database system. One field office that we visited tracks
it separately, but that is not consistent across all field
offices.
Chairman Miller. So you--if I may interrupt you--so you
were not able to determine or they or--and I am going to get
Mr. Passantino to comment on this--they do not record all
incoming actions?
Ms. Lasowski. That is correct. And, therefore, they are not
accountable for every phone call or complaint that they receive
in terms of what they have done with that particular complaint.
The----
Chairman Miller. So you don't know if that was--if an
incoming call, when you don't know--if it was resolved, how it
was resolved, in whose favor and what kind of complaint it was?
You don't necessarily know that?
Ms. Lasowski. Only the ones that are entered into the
database.
Chairman Miller. And that is a discretionary decision?
Ms. Lasowski. That is correct at the local level. The data
that we present here is based on the data that we had obtained
in their database, which then shows that most of their
enforcement actions were driven by complaint, and then the
information that we have here is based on those that were
recorded in the system.
Chairman Miller. Mr. Passantino?
Mr. Passantino. Thank you, Mr. Chairman.
I guess the first point, with respect to whether we take
and record every incoming call in the Wage and Hour Division,
the answer to that is no. And we don't record every call
because in many ways we are the great dumping ground for labor
issues. People call us with every possible labor-related issue,
whether it is unemployment insurance or what have you, and
there are issues that----
Chairman Miller. So are you telling me those are the only
calls--the unrelated calls are the only ones you don't record?
Mr. Passantino. I am saying that we record complaints. And
a complaint for us is a call that provides a reasonable
likelihood of a violation of a law that we enforce.
Chairman Miller. And who gets to make that determination?
Mr. Passantino. It is the local investigator or technician
on the call----
Chairman Miller. Person on the----
Mr. Passantino [continuing]. In consultation with
management if they----
Chairman Miller. So that person makes the decision. If that
didn't meet that threshold, that call is not recorded?
Mr. Passantino. That is correct.
Chairman Miller. So we don't know whether or not that
person is sloughing off calls or not informed with the law? We
don't know why that person may not be recording 20 percent of
the calls, for example?
Mr. Passantino. Well, I think we have to rely on the
expertise of our field staff and the training that they
receive.
Chairman Miller. But you don't have any ability to check on
that? You don't have any comparisons between field staffs if
this is a discretionary decision and you never get a second
complaint for somebody who was told that they didn't have a
real complaint in the first part?
Mr. Passantino. We do not record the information for calls
that we receive that do not provide a reasonable basis for
proceeding.
Chairman Miller. Mr. Kutz, what was the situation with the
calls that you saw? Those were recorded?
Mr. Kutz. Yes, those were reported in the system. Correct.
Chairman Miller. And so the calls where people were not--
their claims were not met or their grievances were not met,
even though, when you checked later, the suggestion was that
they were in the right or they could--or they should have been
met or what have you, those were still recorded?
Mr. Kutz. Yes, they were all recorded. I mean, seven of
them, there were indications of labor-law violations, either
determined by Labor or the employer admitted to it. The other
eight were ones that were just not worthy because of resource
issues, the statute of limitations or whatever.
Chairman Miller. But the statute of limitations may have
been because the failure or breakdown in the process?
Mr. Kutz. That is correct. There was a backlog----
Chairman Miller. Complaints were taken----
Mr. Kutz. Right.
Chairman Miller [continuing]. But they were not acted on
within that time.
Mr. Kutz. That is correct. They appeared to be within
Labor's jurisdiction for----
Chairman Miller. It wasn't that the person calling was
outside the statute of limitations?
Mr. Kutz. Correct. But they were----
Chairman Miller. The complainant was not outside the
statute of limitations. The action was outside the----
Mr. Kutz. The action was. Correct. I mean, they were
received, and Labor determined that they were within their
jurisdiction. They just didn't get to them until it was too
late.
Chairman Miller. Ms. Lasowski, does that description of why
calls were recorded or not recorded comply--or comport with
what you found?
Ms. Lasowski. The local investigators do have the
discretion to make a decision, and regional offices can also
weigh in in terms of what their workload is and whether or not
they have travel resources. So, yes, there can be decisions
that are made at the local level that impact as to whether or
not they register the complaint.
Chairman Miller. So you are telling me that a person's
complaint may not get answered simply because there are
complications within the office in terms of staffing time or
travel time or other requirements such as that so we don't go
to the merits of that case?
Ms. Lasowski. The policy that the Department of Labor has
in terms of their field office handbook does allow them for
that discretion.
Chairman Miller. I have to tell you, I would have a lot of
trouble, I guess, if I was on the other end of the phone, and I
was looking to recover wages. In the cases that Mr. Kutz
suggested, some people are owed a couple thousand bucks, and
most of these were low-income occupations. So I make the
decision I just can't deal with that now, and that is it?
Ms. Lasowski. That is possible. And then the other thing
that I would----
Chairman Miller. How the hell can that be sort of equal
treatment? How do you do this, Mr. Passantino? The person picks
up the phone----
Mr. Passantino. Frankly, I think----
Chairman Miller [continuing]. They say, ``I can't get to
this. I can't investigate this'' as Mr. Kutz pointed out, ``I
can't find the address of this employer so you are out your
wages. We agree that you are owed--they are owed to you, but I
can't get there.''
Mr. Passantino. I think you underestimate the dedication of
the career----
Chairman Miller. No, no, I don't underestimate it. I am
trying to determine the standard. Don't hide behind the
dedication. I assume they are dedicated. I am trying to
determine what the standard is so that people can get their
complaints answered. And it goes to the question back, that has
been raised here, whether or not you have sufficient people and
resources are allocated based upon workloads. This has nothing
to do with the dedication of the people. It might be quite
rational for that person to say that, but that may not be the
standard that workers in this country deserve. Don't get them
all mixed up here.
Mr. Passantino. I believe that we have----
Chairman Miller. Do you know the extent to which people
sort of disconnect on a caller for those reasons?
Mr. Passantino. I do not----
Chairman Miller. It is not recorded, right?
Mr. Passantino. I do not know that----
Chairman Miller. So you don't know the efficiency of your
offices?
Mr. Passantino. I am sorry?
Chairman Miller. You don't know the efficiencies of your
offices?
Mr. Passantino. I know their efficiencies based on the
number of workers that they have impacted over the past several
years.
Chairman Miller. Yes, but you don't apparently know the
number that they have failed to take because they either were
short staffed, short time, didn't have allowances to
investigate or to follow up.
Mr. Passantino. We don't record information----
Chairman Miller. So it might be that you should have
collected $2 billion?
Mr. Passantino. I am sorry?
Chairman Miller. It might be that you should have collected
$2 billion in back wages? You are crowing about collecting a
billion whatever it was. Maybe it should have been $2 billion
if you had responded to the cases that Mr. Kutz found.
Mr. Passantino. I believe that we have made requests for
additional funding, and those requests for funding have not
been granted. We have requested that the H-1B program be fixed
in order for us to access that information, that funding for
low-wage industries----
Chairman Miller. Let me just ask you one question: As I
understand it, on the--that for 2007 we experienced one of the
higher recidivism rates. Is that accurate? I mean, the dollars
have been going up, but then we see an increase in the
recidivism rates----
Ms. Bobo. Mr. Miller----
Chairman Miller [continuing]. Of what appear to be about 34
percent? Just a second.
Mr. Passantino. I am sorry. I am----
Ms. Bobo. Can I give an example while he is looking for
that?
Chairman Miller. No. [Laughter.]
Ms. Bobo. Okay.
Chairman Miller. We will get back to you in a little bit
here.
Ms. Bobo. All right.
Mr. Passantino. I am sorry. I don't have that information
in front of me.
[OFF MIKE]
Chairman Miller. No, it is not.
According to--this is a document from----
Mr. Passantino. The White House.
Chairman Miller [continuing]. From the White House.
Recidivism rates have gone up substantially in 2007. I just--
again, I am trying to determine the data which the department
is working off of. The GAO report--and we will get back to this
because my colleagues have a chance here--raises serious
management questions. Again, these are not questions about the
dedication of the workforce. They are whether or not you have
sufficient evidence so you can target and deploy your resources
and you can respond to the needs of many citizens that,
unfortunately, find themselves in this position of having their
wages stolen from them.
I will just stop with that because I want to come back to
it, and I want to turn--I am out of time.
Recognize Mr. McKeon.
Mr. McKeon. Mr. Chairman, before I begin my questions of
the witness, I would ask unanimous consent to include in the
record of today's hearing two documents reflecting data
provided by the Wage and Hour Division. The first shows the
trend in the number of Wage and Hour investigators from 1987
through 2007, which I think represents a fuller picture of
these trends. And the second chart shows a trend in the number
of enforcement hours per Wage and Hour investigator over the
period of 1993 to 2007.
Chairman Miller. I have no objection.
[The information follows:]
------
Mr. McKeon. Thank you.
Also, could we get a copy of that----
Chairman Miller. I will put it in the record.
Mr. McKeon. Great.
Mr. Passantino, during the chairman's questioning, we just
heard some discussion about the statute of limitations running
on certain complaints or claims. Can you tell me, does the
department have any policy with respect to claims on which the
statute of limitations may be ready to run? Can and does the
department seek waivers on the statute of limitations and Fair
Labor Standards Act cases?
Mr. Passantino. Yes. In certain cases we will seek what is
called a tolling agreement. In the tolling agreement the
department and the employer agree to toll the statute of
limitations, that is, to stop the statute of limitations from
running from that point going forward.
Mr. McKeon. You know, as I look at these charts that I just
put in the record that show the number of investigators went
from like in 1987 951, it went up to 970, it went down to 781
in 1996, then it jumped up to 942, then it went last year down
to 732.
You have a copy of that; right?
Then on the enforcement hours per Wage and Hour Division
investigator, it went from in 1993 at 1,242 down to--1997 down
to 786, then it worked its way back up to 1,255, 1,268, 1,229
last year.
It looks to me like your people are working very hard and
maybe there is an insufficient number of people to keep up with
all the complaints. You have said that you have requested
additional funding and haven't been able to receive that. I
think we may be looking at something here that--again, we have
had these kind of hearings before where--I don't dispute what
you say or what you say or what you say, but, again, you look
at the elephant, and you have different people, different
perspections--different perceptions. If you have three blind
people, look at the elephant, some see a wall, some see a tree
trunk, some see a rope.
It sounds to me like you could pick out 15 of these
investigations and have some problem, and like you concluded,
we don't know if that is systemic or if those were an anomaly.
We don't really know.
I think, if you looked at full disclosure of anything--if
you looked at your office or my office, we could find some
things that we could be doing better. We could also find some
things that we are doing a good job of. And I think we could
probably find that, if we were able to give the Wage and Hour
Division more money and these division directors--I would like
to hear from some of them, if we had had the opportunity--that
are on the frontline trying to handle some of these problems--
if they could have additional people so that phone calls don't
go unanswered, so that all complaints--every complaint--is
answered--at least that fits--I would assume, Mr. Passantino,
you said that you are kind of a dumping ground for any kind of
complaint. Somebody calls up and, for whatever reason, they are
fired or whatever, they go to you, and maybe that--it doesn't
even fall within your realm. I can see where you shouldn't have
to record that.
By the same token, if you have a list of 25 people that
have called that you have recorded because you do think they
fall under your jurisdiction and you have--and you have
reasonable needs to go after those, but you have one
investigator, and they are working 40 hours a week, and they
can only do so many in a day and that 25, they are also
answering calls, and that goes up to 30 during the day, and
they have only been able to operate--work on 2 or 3, that the
load would just overwhelm them.
And let me just--Mr. Passantino, I would like to give you
an opportunity to respond to Mr. Kutz's testimony regarding
case studies of wage and hour investigations. In that
testimony, the GAO highlights 10 cases where they allege that
the Wage and Hour Division inadequately investigated wage and
hour claims.
First, I would ask you, can you put these in context for
us? Roughly, how many investigations does the division conduct
annually? And as a follow up, I would ask do you view these 10
cases selected by GAO as representative of the broader universe
of wage and hour claims your agency investigates?
Mr. Passantino. Thank you. On the first point, the period
in question was the last 3 fiscal years. During that time, we
have done about 90,000 cases, although I think there are about
70,000 complaint cases, which is probably the more appropriate
universe.
Mr. McKeon. Ninety-thousand cases over 3 years investigated
by 800 people roughly average?
Mr. Passantino. Correct.
Now, as has been testified, about 50 percent of those are
what we call conciliations. And those--50 percent of those
cases take up about 5 percent of our FLSA enforcement time.
Mr. McKeon. Would that be like, if they take a complaint,
they call the employer, they agree, and they work it out and it
gets taken care of?
Mr. Passantino. Typically, conciliations arise out of last-
paycheck issues. We use the conciliation tool when it is one
employee with a limited issue that is not likely to impact
other employees in the company. And in that case, yes, we will
call the employer in an effort to resolve that particular last-
paycheck issue.
Mr. McKeon. Excuse me. I interrupted you.
Mr. Passantino. I am sorry. I forgot the second part of the
question?
Mr. McKeon. You were at 90,000--the last part was do you
view those 10 cases selected as representative of the broader
universe of wage and hour claims your agency investigates?
Mr. Passantino. I don't believe that it is. I think that,
whenever you have an agency that has human beings, there is
going to be human error. I think that our management-review
process and our accountability-review process is intended to
go--to root out problems in particular places. And I do not
believe that the 15 cases that were identified out of the
70,000 complaints in the last 3 years are indicative of the
agency's performance.
Mr. McKeon. Thank you.
Mr. Kutz, how did you pick those 15 cases?
Mr. Kutz. Let me just give you an indication first. There
was an individual that worked in WHD that had allegations about
issues with respect to cases. So we started with an allegation,
interviewed an individual. And so we looked at several dozen
cases to see if some of the things the individual had said were
going on were in fact true. So that is how we got to the
limited number of cases. So I certainly agree they are not
representative.
However, some of the things that we talked to about the
frontline investigators are indicative of representative
situations where--and I think it is that they are stretched too
thin in many cases so that they don't have time to follow up.
And the other thing that hasn't been discussed is the
possibility that there aren't enough attorneys involved.
Because some of these cases they had determined that there was
a violation. In one case it was a $60,000 violation for 24
people, and the investigator did a good job, from what we can
tell of the investigation, but for whatever reason, it was
dropped, and it appears probably because there were no
attorneys to prosecute a case. And so that could be another
cause here of what is going on--a matter of resources.
So, yes, these cases are not necessarily representative,
but on the other hand, there appears to be some systematic
things underlying why they were dropped.
Mr. McKeon. Interesting to hear that there are not enough
attorneys. That is just a joke around here. We have got lots of
attorneys.
But, you know, I would think if you--did you find any cases
that you looked at where they had done a good job?
Mr. Kutz. There were some that it appeared--especially the
ones that I said where they did a good job in the investigation
but unexplainably--can't tell for sure why--the case was
closed----
Mr. McKeon. Did you find any that they had done a good job
in the investigation and had followed through and had been
satisfied and both parties were----
Mr. Kutz. No, because we were not allowed to talk to the
employer or employee so we could not conclusively determine on
any cases. We are trying to work out protocols with Labor where
we can contact some of these people. Absent being able to
contact, we are unable to determine a successful resolution of
any case.
Mr. McKeon. So we probably--there should be a little more
investigation in this because it would be hard to me--hard for
me to think that out of 90,000 cases handled in the last 3
years they didn't do a good job on 1 or 2--you know?--or maybe
even 50,000 or 80,000, you know. It is hard to think that
everything they did was bad, you know, or led to a bad
conclusion. So I----
Chairman Miller. Would the gentleman yield?
Mr. McKeon. I would be happy--well, my time is up----
Chairman Miller. I just----
Chairman Miller. On the question of--you said you were not
allowed to contact the employer or the employee?
Mr. Kutz. That is correct.
Chairman Miller. That is why?
Mr. Kutz. Because I think the issue is at the hotline and
they want to work out protocols with us as to maintaining the
confidentiality of these individuals.
Chairman Miller. This is an ongoing investigation, correct?
Mr. Kutz. Yes, that is correct.
Chairman Miller. So it is--you are in the process----
Mr. Kutz. So we would hope to work with Labor on acceptable
protocols, where we can--if the person is willing to talk to
us, that we can actually speak to the----
Chairman Miller. But you are not referring to being able to
talk to people within the agency?
Mr. Kutz. No. We have talked to investigators. The
frontline investigators for these 15 cases, we talked to them.
So that is where we got a lot of our information. We had all
the case-file information.
Mr. McKeon. I am claiming my expired time.
Can I just follow up and say could there be a chance that
we could continue this dialogue after this investigation is
complete, once they--I mean, it would be more meaningful, I
would think, if we could have a final conclusion to this and
hear the whole story once you work out that protocol. And I am
not saying----
Chairman Miller. We plan to. I think we plan to.
Mr. McKeon. I think it would be a good thing.
Chairman Miller. Mr. Kildee?
Mr. Kildee. Thank you, Mr. Chairman.
My questions are directed to Ms. Lasowski and Mr. Kutz.
Does no enforcement or puny enforcement of wage and hour
laws become contagious, in that employers know that they can
get away with violating the law or be treated gently? And is
the present level of enforcement always been that case at DOL?
Have there been times when enforcement was more stringent? We
have had the law on the books since June 25, 1938. Are there
times when the enforcement was much better? Is this a low
point?
Ms. Lasowski. In terms of its performance, we were not able
to assess over time what progress it has actually been able to
demonstrate and make because the department has changed
frequently its performance measures and what it actually
reports. So, for example, for the 10-year period that we looked
at, there are 131 measures that were established but 90 percent
of those changed every 2 years, and 67 percent of those changed
each year.
In addition, of the 131 measures, only 6 were reported for
more than 1 year. So it is difficult to see the progress that
has been made at Wage and Hour given the constantly changing
performance measures and reporting of those measures.
The department has reported number of actions it has taken
over the course of that 10-year period, and there has been a
decline in the number of enforcement actions from 1997 to the
present.
Mr. Kildee. So it may be difficult to determine that, but
you must be able to see some signs where in certain periods
enforcement seemed to be better.
Ms. Lasowski. We were not able to make that determination
because of the frequently changing performance measures.
Mr. Kildee. So there is no way over the 70 years we can say
that during this time there was greater compliance than there
is today?
Ms. Lasowski. We only looked at a 10-year period so we
would not be able to comment in terms of the entire period of
time. And, no, we are not able to indicate what progress the
department has actually made given the changing performance
measures and what it reports.
Mr. Kildee. I can just recall, when I served in state
legislature, that it seems to me that the effectiveness of the
DOL in enforcing these things was much greater. That is just my
anecdotal remembrance of when I was serving on the committee in
the state legislature.
Mr. Kutz, do you have any comment on that?
Mr. Kutz. Not on a historical respect, no.
Mr. Kildee. Wouldn't that be interesting to find out,
though, whether there is a certain contagion in this? If
employers know that there is a certain--dismissing of certain
or failure to investigate further, is it not likely that this
will become contagious?
Mr. Kutz. Well, I can just comment on this: Some of the
frontline investigators that we interviewed did indicate that
the employers out there that are the shysters, if you will, are
aware that Labor's WHD is stretched thin. I think that would be
something that people would know out there, and, therefore,
they may be more likely to try to take advantage of certain
employees.
Mr. Kildee. So there is a certain knowledge out there that
can become contagious that these----
Mr. Kutz. That is what frontline investigators told us in a
couple of cases. I can't say that that is representative, but
that was what several had told us.
Mr. Kildee. So beyond the 10-year period--and we cannot
find any trend or any time when the employer might be a little
more concerned that enforcement will take place?
Ms. Lasowski. We were not able to make that kind of
assessment.
Mr. Kildee. Okay. Well, I think we could say that,
generally speaking, when you have no policemen around that
maybe crime--other types of crimes--can be committed, and that
you have to have--the idea that apprehension and enforcement is
going to be there in order to get compliance.
This is really, to my mind--and I was 7 years old when
Franklin D. Roosevelt signed this bill into law, and then going
through my legislative career in Lansing, Michigan, I do know
that I could play a role in making sure that someone would make
a complaint, and they had greater assurance that the employer
would be forced to comply with the law, but I don't see that as
much now.
Thank you, Mr. Chairman.
Chairman Miller. Mr. Kline?
Mr. Kline. Thank you, Mr. Chairman.
Thank you, ladies and gentlemen, for being with us today.
Mr. Chairman, I hope that at some time we will be able to
have a hearing on the impact of the underfunding of the Office
of Labor Management Standards, what impact that might be having
on the abuse by some union leadership to their union members.
But that is not the subject today. I am interested--because
we have some anecdotal information here, and some anecdotal
information we don't even have, we are just guessing at but--
sorry. I guess we have got bells going off here somewhere.
As I understand the 10 or 15 cases, sir, that you were
looking at, that--you have got information from talking to the
investigators, but you don't have any information from either
the employers or the employees to reach your conclusions; is
that right?
Mr. Kutz. Not oral information. Written information that
was in the case files, yes. But not the ability to speak to
them.
Mr. Kline. Okay. I see. Thank you very much.
We have got some anecdotal information, but we are also
looking for some--something a little bit more objective, and it
seems to me that we have some of that. We heard testimony from
Mr. Passantino--I think, in response to Mr. McKeon's question--
that there were some 90,000 cases, 70,000 complaints that were
dealt with in the last 3 years.
And I think, Mr. Passantino, in your testimony you said
that in 1997 30 percent of wage and hour cases investigated by
the agency resulted in findings of no violation but in 2007
that number was down to 19 percent. Those would be the
policemen that Mr. Kildee was talking about, I suppose. Meaning
that more than four out of five investigations did find
violations of the law. Can you expand on what these numbers
mean as a practical matter? What accounts for this change?
Mr. Passantino. Thank you, Congressman.
With respect to the numbers that you cite, I believe it is
actually--it went from 35 percent down to 19 percent, and it
reflects an emphasis on taking quality complaints and working
cases in such a way to ensure that the worker's rights are
preserved. Meaning a case comes in the door or a call comes on
a--we get a phone call, and when we are doing our screening and
realize that there isn't a violation of the law at that point,
we don't record that as a complaint, and we don't spend the
agency's limited resources on responding to that. So in doing
that and doing a better job of screening, we have been able to
reduce the percentage of cases that the agency takes in which
we found no violation of the law.
Mr. Kline. Okay. Thank you.
I have got a note here that I don't fully understand. Maybe
you can help me with it. Why did your agency not use
information on whether back wages and penalties assessed are
actually collected to determine if you are fulfilling your
mission? The GAO report mentions that you are able to track
this information. What is that about?
Mr. Passantino. We do track the information with respect to
back wages and civil money penalties. We don't use it in the
planning process because it doesn't assist us in targeting the
appropriate entities. It doesn't assist us in targeting the
appropriate industries. It just assists us in determining
whether the people that we have recovered back wages from--or
the employers we have recovered back wages from and assessed
penalties against--have had the ability to pay or have paid.
Mr. Kline. Okay. Thank you.
I was thinking about Mr. Kildee's questions and
observations about do we have historical information, and the
GAO said no, I believe, was the answer. We can't go back in
history to see whether we are doing better or worse.
But your numbers, Mr. Passantino--the number of cases that
you are taking--the number of complaints--and the improvement
in the number where you have found actual violations would seem
to me to be an indication of a system that is working and not
one that is sliding in the wrong direction.
Of course, we don't have that historical information to go
by, but it is hard to understand why Ms. Bobo would claim that
we are in a crisis. I am not sure what that is in relation to,
historically or just today. Would you care to answer?
Ms. Bobo. Well, if you look at the FLSA lawsuits that have
been filed, they have quadrupled in the last 10 years. Now, you
know, you could say, well, lawyers are just going out of
control, but I don't really think that is the problem. I think
we have employers that are routinely stealing wages from
workers, and it is a crisis, and as a result, we have seen--
there is a 73 percent increase in the number of FLSA suits
filed from the previous year to last year. So we are seeing an
explosion of workers not being paid and filing lawsuits in part
because the Wage and Hour Division is not able to handle cases
and they are referring people to the private bar to handle many
of these cases.
Now, I am glad the private bar is helping out, but
particularly for low-wage workers and where it is one or two
workers in a workplace, it is not sufficient. They need to
know, if they go to the Department of Labor, that their case
will be handled.
Mr. Kline. Thank you very much.
I yield back.
Chairman Miller. Thank you.
Mr. Courtney?
Mr. Courtney. Thank you, Mr. Chairman.
I actually wanted to follow up on Ms. Bobo's comment, which
is that the failure of the agency to do its job is actually
resulting in a shift to----
Ms. Bobo. Absolutely.
Mr. Courtney [continuing]. To employees having to find
legal representation----
Ms. Bobo. That is right.
Mr. Courtney [continuing]. Privately.
Mr. Kutz, your report--actually out of the 15 cases, 5 of
the cases, by my count just reading the notes, resulted in
referrals to--or advice to go seek their own private remedy;
isn't that correct?
Mr. Kutz. At least five, possibly seven. But, yes, at least
five.
Mr. Courtney. Well, the irony is is that in this morning's
New York Times--and maybe this article can be made a part of
the record, Mr. Chairman--the comment from the Labor Department
in terms of, you know, dismissing the GAO report was--the Labor
Department said, ``The Wage and Hour Division is delivering pay
for workers, not a payday for trial lawyers.''
I mean, Mr. Kutz, in fact, the opposite is true. I mean,
the inability of this department or unwillingness of this
department to use its--to do its job is resulting in, in fact,
a payday for trial lawyers; isn't that correct?
Mr. Kutz. I can't speak as broad as Ms. Bobo. One of the
five cases you mentioned, there actually was one where Labor
didn't go after it, there was a private lawsuit and there was a
settlement with the employees. So--and that was a case that
Labor decided not to pursue.
Mr. Courtney. Ms. Bobo, I mean, is that what you are seeing
out there on the street?
Ms. Bobo. Yes. That is what our 19 worker centers around
the country report.
And, again, 10 years ago there were no worker centers in
the country. Today there are almost 200 worker centers, and
they all--the number-one thing they work on is helping workers
collect back wages. And across the country these worker centers
don't want to refer things to the Department of Labor because
it either takes so long or they don't follow through on things.
And so, you know, we are doing all these things that don't
really make sense. We need a strong Department of Labor that we
can refer cases to.
Mr. Courtney. And I guess the other question I was going to
ask you is that, based on your experience dealing with low-
income individuals, some who are homeless--I think there was a
reference to one of the cases--I mean, in fact, their ability
to access private counsel is not universal. I mean, the last
time I checked, in fact, this was really not the plaintiff's
bar's, you know, prime area of litigation is----
Ms. Bobo. Especially where it is one or two workers and it
is a small amount of money. Absolutely.
Mr. Courtney. Okay. And I guess, you know, Mr. Passantino,
I mean, we have this chart sitting in front of us, which is,
again, not a verbal account of a case, but actually, you know,
your department's written comments. I mean, what is your
response to that letter that was presented by Mr. Kutz?
Mr. Passantino. I am not familiar with the specifics of
that particular case. I am not--I can't even see what the--who
the addressee is.
But I will say that each day we have to make determinations
of where our resources are best spent. And every week I get a
weekly report from each of our regions that contains
information on the highlights of their cases from all the
district offices, and I see the types of violations and the
industries that those violations take place in.
We are never going to be able to handle all of the cases.
We are never going to be able to handle every violation and
ensure 100 percent compliance. It is not going to happen. Even
if you went to historically high levels of cases that the Wage
and Hour Division has done and assume that each one of those
cases was conducted in a separate establishment--in a separate
location--it would take the agency somewhere in the
neighborhood of 100 to 150 years to visit every employer. And
that doesn't include the opportunity for new businesses to be
created and who goes out of business.
And so we have to make decisions based on the resources
that we have available to us on which cases we are able to take
that are going to impact the workforce most significantly. And
while we try to get recovery--I mean, the whole point of
conciliations is to get recovery and to make an effort to
recover, you know, a relatively small amount of money for one
person where it is not indicative of the systemic violation, if
we are not successful in doing that, there is not a whole lot
that we can do given the resources that we have.
Mr. Courtney. Well, that statement, frankly, is a far cry
from what your department told The New York Times in the paper
this morning. Because, what you are basically saying is is that
you really, you know, surrender when you sort of run into a
stone wall and really leave workers with no other option but to
seek their own private remedies, which, you know, I guess we
should give you the trial lawyers, you know, government
employee of the year award.
But the fact of the matter is is that, you know, what the
statement was by your department in The Times this morning was
completely misleading in terms of what really is happening to
workers out there based on your own agency's determination of
cases where you feel like you have just sort of run out of
options.
So I yield back.
Mr. Kutz. Congressman, could I just add to that real
briefly.
That was actually probably the more difficult case because
those were painters who were not legal U.S. citizens who had
worked for a month. So it is even less likely they are going to
be able to find a legal resolution because they are scared of
being deported.
Chairman Miller. Mr. Payne?
Mr. Payne. Thank you.
Mr. Passantino, in your statement you indicate that the
department had recovered about $1.25 billion since 2001. So I
am wondering if you would give us estimate of the $1.25 billion
in recovered wages? What steps has the department taken to make
sure that the correct employees actually receive the money that
the department determines that these folks are owed? In other
words, what percentage of the $1.25 billion can the department
confidently say was actually paid to the correct employee?
Mr. Passantino. Thank you for your question.
I believe that our most recent data indicates that we have
collected 93 percent of the amounts that employers agreed to
pay on behalf of the workers. What we do in order to ensure
that workers are paid varies depending on the circumstances.
You know, Ms. Bobo was instrumental in getting us what is--we
call the backwage locator, which is something on our Web site
that allows employees who believe that they might have payments
made to--as a result of a Department of Labor proceeding, they
might have monies that are due to them, they are able to go on
the Web site and check to make--and see whether they have those
funds available.
Mr. Payne. So it is up to them to contact you? You don't go
out to reach them? And you are saying 93 percent, you think,
have gone back to those people who were given the shaft?
Mr. Passantino. I am sorry. That was one example of what we
do. I mean, we do outreach events. I was--personally attended
one in Mississippi, where an advocacy group was there with us
handing out checks to the workers to make sure that the workers
received the payments that they----
Mr. Payne. Okay. Well, maybe, if you could follow up in
writing in answer to the question, I would be interested in
that.
Also, you mention that some GAO case studies involved
employees who are repeat offenders, who owe back wages of over
$60,000--who admit to owing back wages, who were deliberately--
lied to the Wage and Hour investigators. Yet none of these
cases were pursued by the Department of Labor. My question is
why is the department not pursuing these violations? I know you
didn't--you are unfamiliar with this particular letter, but
maybe in general you might answer.
Mr. Passantino. And, again, I am not familiar with the
specifics of that case, but I would be glad to look into them
for you.
Mr. Payne. Okay. If you get that back to me.
And just, finally, at the beginning of your remarks, when
you were characterizing the GAO, could you repeat the wrongs? I
was kind of curious.
Mr. Passantino. They are wrong about the purpose of the
list of the nine industries. They are wrong on where the
independent reports direct us to focus our resources. They are
wrong on where we should be focusing our resources. Wrong on
the value of stakeholder meetings at the district office level.
And wrong on whether district offices consider complaints in
the planning process.
Mr. Payne. Have you informed the GAO that they are so wrong
and have you had any consultation with this wrong--totally
wrong group that is coming up with these wrong reports
because----
Mr. Passantino. Well----
Mr. Payne [continuing]. Your reports are all right when you
can't answer a simple question about a letter, when you can't
follow up with the questions that I have asked. You don't know
the answers. You just know how GAO is totally wrong.
Mr. Passantino. We received a copy of the testimony on
Thursday afternoon. In that time and before this morning, we
have not had the opportunity to speak to GAO about those
concerns. When we met with GAO during the final conference
about a month ago, we understood that a written report would be
coming out towards the end of July and that we would be given
the opportunity to formally comment on that. We have not been
provided that opportunity other than in this hearing.
Mr. Payne. So you conclude that they are all wrong.
Mr. Passantino. Well, we have reviewed the statements that
they have made with respect to each of those items that I
identified, and they are, in fact, wrong.
Mr. Payne. Well, Mr. GAO representative, are you all wrong?
Mr. Kutz. I don't think he is talking about the 15 cases. I
think he is talking about some broader issues. So I don't
believe they would agree the 15 cases are wrong because we took
it right out of their records and it is what their people told
us.
Mr. Payne. Okay.
Chairman Miller [continuing]. Ms. Lasowski's----
Mr. Payne. Yes.
Chairman Miller. I think it was her testimony that he is
referring to.
Mr. Payne. Okay.
Ms. Lasowski. Mr. Congressman, we stand behind our
statement and the analysis and work that we did over those past
9 months in terms of this particular review. We did have an
opportunity to discuss these findings and our potential
recommendations with the department in June. Afterwards, we
received the official request to actually testify, whereby we
then transferred our statement into this, which you have before
you today.
In terms of where Mr. Passantino says we are wrong, we did
not mischaracterize the purpose of the 9. We did review the
actual commission study, and the study, while it did indicate
there were 33 low-wage industries, there were 9 in particular
that they indicated would be the ones where the greatest
potential of violations would occur. When we did an analysis of
those particular 9, we saw that there was not a substantial
refocus on those particular 9. There was only a 2 percent
increase from the time that the commission studies were
completed.
In terms of resources, we recognize that there has been a
decline in the number of resources and, therefore, like every
other government organization, it is important for an agency to
strategically manage those resources. We see that there were
opportunities for leveraging existing tools and available
information to better strategically manage those resources.
In terms of stakeholder input, we do have the timeline in
which stakeholder input is provided, and indeed it does occur
after the national priorities are set. Previously, the national
headquarters did receive direct information from stakeholders.
That process did change, and now they are reliant on second-
hand information that comes later in the process, and,
therefore, external stakeholders don't really have that input
early in the planning process.
Mr. Payne. Thank you very much.
Chairman Miller. Time is expired.
Ms. Woolsey?
Ms. Woolsey. Thank you, Mr. Chairman.
And thank you to the panel.
First, just a comment.
I can tell you, Mr. Passantino, that, if you actually had
enforcement standards that were--and penalties that were
meaningful and fines and back pay that was collected, there
would be fewer stolen wages. And it is absolutely important
that your agency understands this and finds a way to make it
happen.
I was really surprised that there wasn't a tracking system
in the agency that could actually prove wrong and prove right
and prove successes and prove need for your agency. I can't--
when Mr. McKeon circulated the hour division investigators and
the hours per wage division investigators--hours worked
actually--I said, ``Oh good, something.'' It doesn't tell me
anything.
What we want to know is the number of claims, the number of
enforcement actions, the enforcement itself, for the fines,
the--what--and penalties, what was collected, what wasn't----
Mr. McKeon. Would the gentlelady yield?
Ms. Woolsey. Yes, sir.
Mr. McKeon. It does tell you something. It tells you how
many investigators there have been and----
Ms. Woolsey. Oh, I understand that. I agree with you
totally.
Mr. McKeon. Oh, I thought you said it doesn't tell you
anything.
Ms. Woolsey. It tells us something. It tells us something,
but it doesn't give----
Mr. McKeon. I guess I didn't----
Ms. Woolsey [continuing]. GAO, and it doesn't give Ms.--the
division----
Mr. McKeon. Gentlelady yield?
Ms. Woolsey [continuing]. What they need to defend
themselves.
Mr. McKeon. I didn't mean that it was all inclusive but----
Ms. Woolsey. No, I know that. I wasn't putting you down.
Mr. McKeon [continuing]. Just more for the record.
Ms. Woolsey. I was excited to get this. I wanted more. I
think they need more. That is what I am saying. It can't be
fluid. We--they need to put together--we need a two-track
system. We need reports, statistics that show trends and point
out needs and point out successes. What a difference that would
make instead of just saying that the GAO is wrong because
Congressman Payne was correct in that. If it is wrong, prove
it.
But what is--and we need to know what we need. And we also
need--the second track has to be what we need to do to build up
the enforcement side of your agency to the intake part, the
consideration and the enforcement.
And part of my question, I believe--I will ask a question.
Mr. Passantino, who do you get your information from when you
are--there is a case? How much is the information coming from
the employer only? How much from the worker?
Mr. Passantino. I am sorry. Are you asking in a typical
investigation?
Ms. Woolsey. Yes, in an investigation. I mean, it is my
understanding that the employer--because they do have records,
but they don't--I mean, they can give you what they have. But
when does the employee get heard in your system?
Mr. Passantino. In a complaint case, the employee is heard
first. The employee will call and make a complaint, and we will
interview that employee, visit the employer, obtain records,
review records, interview additional employees if it appears
that there are other issues. In a directed case or a targeted
case, we will likely show up at the employer first, but during
the course of that investigation, we will interview employees,
review records and discuss--talk to former employees, current
employees in all of those investigations.
Ms. Woolsey. All right. And I do understand that. But then,
when it comes to the fine and the penalty and the payment, you
do not go back to the employee to see if they were--if they
received the pay?
Mr. Passantino. In some cases we supervise the settlement
directly and we pay--the money comes from the Department of
Labor to the employee directly. And in those cases, we assume--
unless we hear otherwise--that the employee has been paid.
In other cases, employers will make the payments, and they
will provide us with proof of payment, and, again, we assume
that that money has been paid unless we hear otherwise.
Ms. Woolsey. All right. I am going to end there and ask Ms.
Bobo. You wanted to give an example back when. Do you want to
give your example now?
Ms. Bobo. Thank you. Actually, in response to that, we just
had a case from our worker center in Cincinnati, where a group
of workers weren't paid. It was investigated because it was
some workers working for a company based in Northwest Arkansas.
They investigated, they found that indeed the workers were owed
money, they reached a settlement, the employer agreed to pay,
and then the workers came back to our worker center and said,
``But the employer hasn't paid.''
So then we called the investigator and said, ``Okay. They
agreed to pay, but they are not paying. Can you do something?''
And the investigator said, ``I don't know if I can do
anything.'' Well, that is not much of a response for workers
who have had their wages stolen.
We have our worker center in Madison, where La Hacienda
Restaurant--there was an agreement made in 2006 to give the
workers $38,000 in back wages. Then again in 2007, there was
another problem, and so again there were more back wages paid
and some fines issued at that point. Then again this year,
there is a group of workers who have now been waiting a year
for a case to be handled, and they estimate that they are owed
about another $40,000 in back wages.
So we have the same company three different times. Clearly,
it is a business practice that is not being stopped. And so
part of this is not only is the division helping people get
their back wages, which of course they should do, but we have
got to do enough penalties so employers say, ``It is not worth
doing it. I have got to pay people instead of just going
through this practice every other year of not paying.''
Chairman Miller. Mr. Hare?
Mr. Hare. Thank you, Mr. Chairman.
I am a bit confused in listening to Mr. Passantino say the
GAO is wrong, wrong, wrong and everything is just going along
swimmingly. And then we hear stories about these different
cases--15--and seeing what we are seeing.
So, clearly, I don't question the dedication. I agree with
the chairman. I don't question the dedication of the employees
here. I think a large part of this maybe it is just--would like
to know your thought on this--I don't think you have enough
people, A, to enforce the laws that we currently have, and I
think that is certainly part of the problem. But I wouldn't,
from my perspective, say the GAO is just wrong on all these
things because I think they brought up some interesting points
today.
Mr. Kutz, I would like to ask you, you said--in the summary
section it says the case they show that the Wage and Hour
Division inadequately investigated complaints from low-income
and minimum-wage workers, alleging that employers failed to pay
the federal minimum wage, required overtime, failed to issue a
last paycheck.
Why do you think the Wage and Hour Division failed in these
situations is my first question, and is it purely a lack of
resources--that we just talked about--or is there a lack of
will, from your perspective, to enforce the law?
Mr. Kutz. In eight of the cases, there wasn't really much
of an investigation. Either nothing was done, the statute of
limitations ran out or, for whatever reason, they closed the
case.
In the other seven cases, there were strong indications
either Labor determined or the employer admitted that back
wages were due, and in each one of those cases, there was a
closure of the case, no assessment of wages, and it is kind of
unclear--the trail ends a little bit on some of those cases as
to why, particularly and--what were there?--24 workers and
$60,000--why nothing more was done to enforce the law in that
case. Labor clearly had records. They had spent 120-hour case--
one of the workers--good investigation to me--a thorough
investigation--it just ended. The trail ended. They turned it
over to their supervisor, and they don't know why it ever
wasn't resolved. They suspected it was because, again, there
was no attorneys that could actually prosecute or take the case
to court.
So I think there is a combination of things so he lack of
resources within Wage and Hour and potentially either lack of
will or other reasons why they are not trying to enforce when
they actually know there is a violation.
Mr. Hare. Would anybody on the panel like to just take a
very uneducated guess as to how many thousands and thousands of
people are not getting the help that they need, whether it is
because the statutes are running out and the Department of
Labor is not doing what they are supposed to do or they don't
have enough people?
I mean, Ms. Bobo, maybe you--or anybody. I mean, we are
probably talking about thousands and thousands of people who
are having their wages stolen every day and----
Ms. Bobo. I would say it is millions.
Mr. Hare. Millions?
Ms. Bobo. Absolutely.
Mr. Hare. Millions of people.
Mr. McKeon. Would the gentleman yield?
Mr. Hare. I would be happy to yield.
Mr. McKeon. You did state this is an uneducated guess?
Mr. Hare. Yes.
Mr. McKeon. And just a guess?
Mr. Hare. Right. But let me just say--okay. But if you are
talking into the hundreds of thousands--as an uneducated
guess--but if you are talking into the hundreds of thousands, I
don't know what happens to these people.
What do we do, Mr. Passantino--what do we need to do to
help more people? What does your agency need to be able to--
whether it is a tenth of what Ms. Bobo said or half or whether
it is all or whether it is more, what do we to help these
people out when they need it, when they are being--they are
being ripped off? And either the statutes of limitations--I
find it--to be honest with you--to not help somebody because it
drags out and the statute runs out still doesn't make it right.
The person had their wages stolen from them.
So what is it we need to do--what does your agency need to
do to be able to, A, help more people and to bring more people
into this process because that is what you are here to do, as I
understand this thing?
Mr. Passantino. Thank you. I agree that there clearly were
identified problems in those 15 cases. Again, I am not familiar
with the specifics of those 15 cases. They are out of a sample
of 70,000. There are going to be problems in cases, and I don't
know what the driving reasons were behind that.
Mr. Hare. Well, beyond the 15 cases. I am saying, for those
people who are out there every day that we are not--for
whatever reason--that we are not being able to reach out and to
help. I mean, what is it that we need to do? What does your
department need--or maybe somebody from the GAO recommend or
somebody suggest to us from Congress--what do we need to do to
help more people who are being taken advantage of by employers?
Mr. Passantino. What we do is we publicize the results of
cases that we resolve. We let the world know, and we let the
area know that a particular case has taken place and that we
recovered back wages for particular employees.
We engage in partnerships, both formal and informal, all
over the country in an effort to leverage our resources and to
get more people to come to the department and to present the
issues that they might have and to gain their trust.
We are doing a better job on the cases that we are working
on. We are impacting more employees per case. We are getting
bigger recoveries in each case because, when we conduct the
cases, we are doing more comprehensive cases--more thorough
cases--in an effort to impact the maximum number of employees
possible.
Mr. Hare. Mr. Passantino----
Mr. Passantino. That being said, for the past several years
we have requested additional investigative resources, whether
it is for investigators or technicians. Wage and hour
technicians are the ones who are on the frontline dealing with
these conciliations that we have talked about and really take a
burden off of the investigators so that the investigators can
go out and investigate.
Mr. Hare. Well--let me--I am sorry to interrupt. I know my
time is up.
Mr. Chairman, I just--just one last quick follow up from
the GAO folks.
Would you concur with that?
Ms. Lasowski. We have made some very specific
recommendations as to how Wage and Hour can improve its
planning and conducting of compliance activities. And there are
several steps that we think that they need to improve,
particularly in terms of having a better understanding of the
actual full complaints to better manage their workload so they
know what their demand is.
They need to better leverage existing tools that they have
available, including partnerships. Partnerships and outreach
activities do constitute about 19 percent of staff time
currently, the remainder in enforcement actions.
In addition, in order to hold the agency accountable, we
are recommending that they consistently establish and measure
their progress and report on it because then--what we found is
that, by constantly changing measures and what is reported,
then you don't really know what progress is being made.
I think these basic steps, which deal with management
practices that are in guidance that surround the Government
Performance and Results Act would go a long way in terms of
helping the department deal with a more strategic approach for
managing limited resources.
Mr. McKeon. Would the gentleman yield?
Mr. Hare. My time is up, but sure.
Mr. McKeon. He is--you know, he is a nice chairman.
Chairman Miller. Gentleman yielding.
Mr. McKeon. Very, very, very brief.
What I am thinking is, when they change, it sounds like to
me the things that they are doing that they are changing over
the years is as different kinds of occupations become prominent
that have problems, you are kind of moving in that direction.
And, you know, we don't make slide rules anymore so we wouldn't
have to go back and check on slide rule manufacturers.
I think they have to have some ability to move and adapt,
and if they had to do things the way they did in the 1930's, we
wouldn't be capturing a lot of data too. I think----
Chairman Miller. Ms. Lasowski, that is not your testimony.
Mr. McKeon. I yield back.
Mr. McKeon. That is not your testimony.
Ms. Lasowski. No. That is correct. We are----
Chairman Miller. It is the opposite of that.
Ms. Lasowski. Yes. What we are indicating is that the
performance measures that have been established over a 10-year
period have changed fairly frequently. Ninety percent of those
were in existence for 2 years or less.
Mr. McKeon. Maybe I misunderstood because I thought that
they have changed performance measures, and they have moved to
like----
Chairman Miller. It is like a school district that changes
the test every year. You can never compare one to the other.
That is the concern, I think, here is----
Mr. McKeon. And in some----
Chairman Miller [continuing]. Is that you don't have the
ability to develop baselines or to develop the variances from
those or the improvements or the lack of improvement.
Mr. McKeon. And in some ways they shouldn't change the way
they measure English every year, but maybe, you know, some
new----
Chairman Miller [continuing]. Yes. We will talk on the
outside.
I just want to know. That was not a quick characterization
of what, I believe, you presented to the committee?
Ms. Lasowski. Yes. What we found is that of 131 measures
that have been established from fiscal years 1997 to 2007, the
majority of those changed every couple of years, and in terms
of what actually got reported, only 6 measures were reported
for more than 1 year. Therefore, if it--one is constantly
changing the measures, then it is very difficult to see what
progress is actually being made in different areas.
The department did inform us that they will change measures
once they have actually reached a particular goal or if the
data is not reliable or if staff are indicating that it is
difficult to measure. They take a variety of factors into
consideration when this--determining what measures to utilize.
However, by constantly changing the measures, then there is not
a way to track what progress is actually made.
Chairman Miller. Ms. Clarke, I think we are just talking
past each other. Excuse me.
Ms. Clarke. Thank you very much, Mr. Chairman.
Let me just say that I think one word really captures what
is taking place, and that is this is an entity within our
government that is just totally overwhelmed. I mean, just in
terms of the past comments about changing performance measures.
That is an indication that your agency is overwhelmed with its
work and has not captured the essence of what needs to happen
to bring remedy for all of these American workers out there.
Let me ask a question to each of you because it is going to
be a different perspective, I believe, of course, from Mr.
Passantino from the rest of the panel list.
As the end of the fiscal year 2007 comes and the Wage and
Hour Division currently has--is it 732 total investigators
nationwide? That is one investigator for every 10,000
employers. If we put this in the context of being overwhelmed
and in light of this, what ability does the division have to
properly and efficiently handle not only current caseloads but
also future caseloads?
And for your employees who, you know, have been mentioned
throughout the testimony today, what are they going through
psychologically? What is the impact on the quality of their
work given the magnitude of the work that they have before
them?
Mr. Passantino. Thank you.
With respect to the investigator numbers, the 732 number is
for the end of fiscal year 2007, and I believe that we have
hired up since then. It is going to be a couple more than that.
I am not entirely sure how many more than that----
Ms. Clarke. Hold on a moment. A couple to me means two. How
many more are you----
Mr. Passantino. I am not entirely sure.
Ms. Clarke. But----
Mr. Passantino. But our fiscal year 2009 request was for 75
additional FTE, which would be investigators and wage and hour
technicians.
Ms. Clarke. But did you break out how many specific
investigators you need? You must have broken that out.
Mr. Passantino. I don't know exactly what we submitted. I
know that it is for 75 FTE. The calculation of the funding that
that will take takes into account a split between investigators
and technicians, and I am not familiar enough with the
specifics of the budget process to know whether it is broken
out in any budget document submitted to Congress. But it is 75
FTE, which is investigators and technicians, and I actually
believe that that request has made it through the
Appropriations Committee here in the House but----
Ms. Clarke. So my question is basically employee morale.
Because these are the folks who are on the frontline to be able
to help all of these workers who are out here, and basically
you are looking at around 10,000 employers--maybe even more as
we, you know, roll out in the upcoming fiscal year.
If their morale is down, if they are overwhelmed with
respect to the number of cases that they have, how does that go
to the quality of the work and their pursuit of justice for
these workers when you don't even have a baseline for quality
here--for quality and success?
Does anyone else have comments on that in terms of the
number--the sheer volume that this division is dealing with?
Mr. Passantino. May I respond to your----
Ms. Clarke. Sure.
Mr. Passantino. We don't have a baseline. We have been
focused on three long-term goals, and that is to improve
compliance in low-wage industries, to decrease employer
recidivism and to improve complaint management.
The measures that have been changing--these measures that
have been changing are all designed to get to the core of those
three goals----
Ms. Clarke. It----
Mr. Passantino [continuing]. To reflect those three goals.
And when they change, it is either because we have met a goal,
or sometimes during the--you know, you come up on the next
fiscal planning season, where you are trying to set goals, and
you realize that the goal that you have set in the previous
year is influencing behavior of managers and investigators in a
way that you don't want it to be influenced. So you change that
goal so that you can better direct the performance of the
people in the agency.
Ms. Clarke. I got you.
I just want to--Mr. Kutz, if you could respond?
Mr. Kutz. Yes. I would just say in--especially in the
cases--the 15 we looked at--7 of them there were numerous
violations--dozens of people, records violations, et cetera.
There does appear to be evidence of some, you know, staff
stretched thin as to why they couldn't take it over the goal
line, if you will, and really enforce the law. They walked away
from those cases, and the explanation can only be that they
didn't have enough resources to take it over the goal. I am not
sure why else you would walk away from someone who is owed
wages and who needs the money. I don't see how else you could
walk away from it.
Ms. Clarke. I know my time is up, Mr. Chairman.
It is very clear that there has got to be a certain level
of disillusionment going on amongst the employees in seeing
their task as being overwhelming.
Thank you.
Thank you very much, Mr. Chair.
Chairman Miller. Ms. Shea-Porter?
Ms. Shea-Porter. Thank you.
Mr. Passantino, you know what is missing here as I am
sitting here listening? A sense of outrage from you that you
are unable to protect the American workers who have worked and
had their wages stolen from them. And this is so disturbing to
me. You should be standing there pounding the table saying, ``I
don't have the resources that I need. I know we have workers
who have worked for free like slaves because their wages have
been stolen.'' And I am sorry that I am upset this, but I have
to tell you, you should be upset about this.
I went down to Katrina, and I saw people having their wages
stolen. I was on a food truck, and they would come up, and they
would say that they had been working--federal contractors had
hired them, and they were working, and they showed up one day,
and they were gone. Their employers were gone. And I have often
wondered what happened to them because their wages were stolen
and they had nothing left.
And so this is really very disturbing to me, and I was
going to ask you if--if we had an event again--I mean, we are
supposed to be in decent times of relative calmness compared to
the aftermath of Katrina. If we had an area that was hit again
like this, what would you do if you are unable to even handle
the cases right now? You are talking about reducing recidivism.
I mean, I think the goal should be ending it. I think an
employer who steals wages from an employee should be
prosecuted, period. Not saying, ``Well, you know, you did
better this year. You know, last year you stole from this many,
and this year you are only stealing from.''
And, unfortunately, this gives a black eye to most American
businesses that do a good job and are honest and pay their
employees, but what happens is we are breeding a kind of
cynicism.
So I would like to ask what you would do right now, if
there were a region with federal contractors and something
happened, what do you have in place to make sure that wages
would be paid to the employees?
Mr. Passantino. I am actually glad you brought that up. The
Wage and Hour Division, the staff in New Orleans, the staff in
Mississippi and the investigators--over 30 investigators from
around the country who were detailed for various periods of
time to that area did a remarkable job. We have done additional
hiring in those offices. We have conducted over 900 cases for
hurricane either cleanup or construction. We have recovered
over 12--or approximately $12 million for 15,000 employees.
Exactly what we would do if a situation like that happened
again, it is difficult to say. Obviously, the first and
foremost priority of the agency is to ensure the safety of its
own employees. And we made sure that everyone was okay, and we
distributed them around the country to various offices that
were willing to take them on and to assist workers.
Shortly after we were able to get back into the city as an
agency--our offices, both in Gulfport and in New Orleans, were
under water, and we were unable to get into our offices. So the
New Orleans district office operated for a long period of time
out of a shoe store in a mall, and the Mississippi office
operated out of a trailer.
Ms. Shea-Porter. I was there so I am aware.
And having a limited amount of time--I hate to interrupt,
but I am asking you is that I, first of all, know that many
people were not paid, and you know that too, and that you
couldn't possibly catch up. And I am asking what is in place
right now, and what are you doing for the federal contractors,
some of who contracted out and then they--you know, three or
four steps away from the company so that they couldn't be
discovered? Did you catch them, were they punished, and are you
ready to catch them if they do this again? They were contracted
to do cleanup, et cetera.
Mr. Passantino. And we--it was a new experience for the
agency. The levels of subcontractors--the number of
subcontractors was unprecedented. We had never seen anything
like it before. We had people working both in New Orleans and
in our national office in an effort to track those individuals
down. In many cases the prime contractor, when we couldn't find
the subcontractor, because my understanding is, basically, if
you had a pickup truck and you could get to New Orleans, you
became a subcontractor. Where we were able to determine that,
back wages were owed to an employee, oftentimes the prime
contractor or a top-tier sub would make those payments to the
employee.
It was part of our investigatory process to track down as
many of the employees that we could, to pay as many of the
employees as we could to----
Ms. Shea-Porter. So let me ask you again.
Mr. Passantino [continuing]. And to track down all the
contractors.
Ms. Shea-Porter. Do you have something in place now to make
sure they don't do that again?
Mr. Passantino. Every one of our resources----
Ms. Shea-Porter [continuing]. Right now.
Mr. Passantino [continuing]. Has a COPA plan that discusses
how we are going to respond in the event of a natural disaster
in that area. Whether we can respond is going to be largely
dependent on the fact and circumstances of a particular
disaster. It depends on whether we can get into the location
and how we can get into the location.
Ms. Shea-Porter. But how about your resources now? What I
am hearing from you--and from all of you--is that you are so
overstretched and you have few employees and you do not have
the resources and you can't even handle what is facing you
right now. So if we do have a catastrophe like that again, do
you have the resources--yes or no--at this point?
Mr. Passantino. Again, we have requested additional
resources----
Ms. Shea-Porter. Okay.
Mr. Passantino [continuing]. But the agency will step up,
just as it did in Katrina. People from all over the country
went to New Orleans and Mississippi.
Ms. Shea-Porter. But if the agency could step up, could you
kindly step up now and make sure that the people who are owed
money right now collect their wages? I just do not find this
acceptable that people work and aren't paid. So if you think
you can step up, step up now so that we are not talking about
``they are doing a better job and the rates of recidivism are
down.''
If somebody in this country works and puts in an honest
day's wage, they should be paid an honest day's pay. And I
think that is the bottom line of why we are having this
hearing. I am very, very disturbed about where we are right
now, and I know that you are stretched, but I would like to see
that outrage on your part saying, ``I don't have the tools that
I need to do this job to protect American workers.''
And with that I yield back.
Thank you.
Chairman Miller. I thank the gentlewoman for her questions.
Ms. Lasowski, you looked and commented on the partnerships,
and I wondered if you might just outline how they work and your
sense of effectiveness of those?
And, Mr. Passantino, I will let you comment on this after
she is done.
Ms. Lasowski. Yes. We spoke with a number of different
officials from various partnerships in terms of their
interaction with the Wage and Hour officials. And in terms of
areas where they indicated that the Wage and Hour officials
were not adequately leveraging the partnerships, some of those
areas had to do with, for example, state partners. State
officials may be conducting their own investigation, and yet
they were not adequately informed by the Wage and Hour
officials of instances where they--that Wage and Hour officials
were already conducting work and had reached a particular
settlement. In those kinds of cases, the state officials then
were cut short in terms of being able to coordinate with Wage
and Hour and then reach a different kind of settlement.
In addition, there----
Chairman Miller. Yes. Let me just ask you--I--are you
inferring a better settlement, a stronger settlement or just a
different settlement?
Ms. Lasowski. I--we are--in that particular case, it was
just an opportunity to pursue for the state officials to their
full extent. We do not know if it would have altered the actual
settlement, but it was an opportunity for the partners--in this
case, state and federal--to cooperate, but they were not
informed that Wage and Hour had already completed and had
settled the particular case.
So there are opportunities for leveraging joint
investigations, for example, which were not done.
In addition, partners also indicated to us that they did
not believe that their partnerships were stretched to the
fullest case ability possible. For example, one particular
partnership wanted to--had some successful outreach
activities--wanted to continue to utilize that and expand, but
Wage and Hour officials were not able to participate in some of
those.
So given that, there are some opportunities given that
there are partnerships that have been established, there are
formal agreements--about 19 percent of staff time is spent on
outreach and partnerships--to fully leverage the partnerships
so that way there can be further education and outreach to
potential complainants, which, obviously, would have an impact
on their workload.
Chairman Miller. Thank you.
Mr. Passantino?
Mr. Passantino. First, I would like the opportunity to
clarify the 19 percent number that has been used. That is 19
percent of investigative time. It does not necessarily include
time spent on partnerships and outreach that is conducted by
management staff. Management staff doesn't always record their
time--where they spent their time--the same way that
investigators do. So when you are looking at that 19 percent
number, that is of investigative time in the--of investigator
time for--so total enforcement hours.
With respect to the particulars of the case with the state
agency complaining that we didn't loop them in, I am not
familiar with that case at all, and I would be glad to look
into it, but I don't think it is all that uncommon for us to
conduct an investigation and not consult with the state agency.
We are enforcing different laws than they are----
Chairman Miller. Let me just ask you--I am asking this out
of ignorance. My assumption is there is some--this is a
discussion of a partnership where there is some formal
arrangement. Is that what we are talking about here?
Ms. Lasowski. Yes, that is correct.
Chairman Miller. Okay. So I understand you--I mean, I
assume you conduct most of these investigations independently.
But where you have entered into a partnership----
Mr. Passantino. Again, I don't know the specifics of what
that partnership required. Different partnerships have
different obligations on the agency. I view the obligation--and
I think most people in the agency view the obligation--as
primarily one of providing bodies, of providing people to
conduct outreach to employees, to conduct investigations when
they are referred by the partnership.
Some of the complaints or criticisms in the GAO report were
about us failing to fund billboard or failing to fund a toll-
free hotline. A toll-free hotline which also criticized for not
being very effective.
When given the choice between--and we have to make choices
because we have limited amount of resources, and no matter how
many resources we have at our disposal, we are going to have to
make those choices between funding a toll-free hotline and
conducting investigations and using that time to spend on
investigations, I think we are going to go with spending time
on investigations just about every time.
Chairman Miller. Ms. Lasowski, in--I think it is in your
report. Yes, on page 19, Empleo--is that--am I saying that
right?
Ms. Lasowski. Yes.
Chairman Miller. Empleo, which was a partnership. You say,
``We had received an award from the Harvard University Kennedy
School for successful innovation to other areas of state to
hold certain outreach events because these efforts would
generate more referrals than the agency could handle.'' What is
going on there?
Ms. Lasowski. Yes. They had conducted through this
partnership a very successful outreach event, which did
increase the number of referrals to the agency when
opportunities arose to further expand this kind of effort. Then
Wage and Hour officials had indicated that they would not be
able to participate, that it would generate a lot of referrals
and how would they be able to handle the workload.
Chairman Miller. Mr. Passantino?
Mr. Passantino. My understanding is that partnership--the
Empleo partnership--it started in Los Angeles and it has now
been expanded to cover all of Southern California. The
expansion that we are not participating in at this time is to
cover the entire state of California. There is also an Empleo
program in the city of Las Vegas.
Chairman Miller. What is going on here? I mean, it was
expanded, or it wasn't expanded?
Ms. Lasowski?
Ms. Lasowski. With the officials that we spoke with, they
had indicated that there was not an expansion throughout the
state as was had initially intended, to increase outreach
activities, which would, therefore--would have an impact in
terms of referrals.
Chairman Miller. Ms. Bobo, you are obviously very familiar
with these partnerships, and I just--I will yield to my
colleagues here in a minute--but you seem to believe that they
could be very helpful in terms of getting people's complaints
satisfied?
Ms. Bobo. Absolutely. If you look just physically at where
most of the Wage and Hour Division offices are, they are in
downtown government buildings, and they are there roughly from
9:00 to 5:00 Monday through Friday. They are not like, you
know, worker-friendly centers. And so if you create these
partnerships, you can create alternative places where people
can go and institutions that workers--especially immigrant
workers--trust in terms of providing them information. So it
really allows you to outreach to lots of workers.
The problem is, when you have an agency that is so
stretched that they can't handle the cases that they currently
are getting and they are doing triage on a daily basis, you
know, they are discouraged from wanting to reach out.
Chairman Miller. Given that that is the underlying fact
here--I think we sort of all stipulated to that fact--then what
do you know about the ability to screen the cases so that you
know that the referrals are legitimate because you have an
agency that is stretched?
Ms. Bobo. I think that is one of the ways that these worker
centers and other advocacies and other partnerships can help is
that we can sort of help ferret out which things they could
handle, which ones meet the criteria, particularly the $500,000
limit, and which things should go to state offices. These
partnerships could be absolutely critical.
And I think the agency--they have expanded them, and they
have committed some resources. I think what we are seeing,
though, is there is not enough resources committed to really
make them take advantage of all the potential there.
Chairman Miller. Thank you.
I yield to my other colleagues seeking a second round.
Ms. Woolsey?
Ms. Woolsey. Yes. Thank you.
With all that we are talking about of the confusions that
are going on and the lack of appropriate amount of staffing and
reporting, I want to talk about the misclassification of
independent contractors, Mr. Passantino. And right now it is--
the enforcement is particularly lax, and so Mr. Andrews and I--
Congressman Andrews and I--have introduced a bill to make it
harder to misclassify and hopefully assist in the enforcement
efforts.
But could you tell me from your perspective--and any other
witnesses--what you see happening with misclassified
independent contractors?
Mr. Passantino. Thank you for that question.
With respect to the independent contractor issue, it is an
issue that we are aware of, and, in fact, our fiscal year 2008
plan--the one that is going on right now--contains a slight
tweak to our typical low-wage industry priority. The low-wage
industry priority has been modified to focus resources in
investigations in low-wage industries that are likely to employ
independent contractors. So the agency is conducting
investigations with the specific intent of determining whether
there is compliance in industries that use independent
contractors.
In every single case, the very first--or one of the first
things that gets done is a determination of whether there is an
employment relationship, which is ultimately what the
independent contractor relationship is about. It is is this
person an employee--the company an employer under the Fair
Labor Standards Act, and if that is the case, we proceed in the
case regardless of what their classification may be.
Ms. Woolsey. Right.
Anybody else? Ms. Lasowski?
Ms. Lasowski. Yes. We did not cover specifically that
particular issue during our interviews with Wage and Hour
officials. However, it did come up as an issue that
investigators in district and regional offices were aware of.
The magnitude of it was--was not known to them, but they were
certainly aware of it.
And I just wanted to point out that GAO has done some work
on misclassifications, in fact, testified on that particular
issue last year and made some recommendations in terms of
better outreach and coordination on the part of the Department
of Labor. Be happy to provide those reports and prior
testimonies for the record.
Ms. Woolsey. Thank you very much.
Mr. Chairman, is that accepted in the record?
Chairman Miller. Yes.
[The information referred to may be accessed at the
Committee's hearing description page at the Government Printing
Office Internet address. The hearing serial numbers referred to
are 110-16, dated March 27, 2007, and 110-56, dated July 24,
2007:]
http://www.access.gpo.gov/congress/house/house06ch110.html
------
Ms. Woolsey. Okay.
Mr. Kutz, did you have anything? Did either of you?
Okay.
Thank you, Mr. Chairman.
Chairman Miller. Thank you.
Mr. Kutz, I have been told that you had experienced some
problems with the department's cooperation in your
investigations and in at least one instance a department
district director actually instructed his staff, apparently, to
leave the office prior to your arrival so that you would not be
able to ask them questions. Is this accurate?
Mr. Kutz. Yes. That happened in Dallas, and we did in fact
interview the individual who is in charge of the office, and
they acknowledged that they told their people to leave so they
wouldn't have to speak to us.
Chairman Miller. Since this is an ongoing investigation,
Mr. Passantino, can you assure us, and will you let us know
when you have informed your offices that they are to cooperate
with this investigation?
Mr. Passantino. Yes. I was not aware of that incident, and
I will look into it and ensure that we are giving our full
cooperation.
Chairman Miller. And you will notify me when you have
informed the offices that they are to cooperate?
Mr. Passantino. I would be glad to do so.
And just so--I mean, we still have an ongoing issue with
respect to GAO's ability to contact employers and employees----
Chairman Miller. No. I understand that. I understand this.
But I do expect cooperation--this committee expects cooperation
from the--your agency----
Mr. Passantino. As do I.
Chairman Miller [continuing]. With respect to this
investigation.
The recoveries you--in your testimony you mentioned that
this last year we recovered $220 million. Those have been
running what year to year? I know what you said. You said from
2001 to 2007, but I don't have your--your testimony is here
somewhere. It is a big chunk of change. It represents a 67
percent increase over back wages recovered in 2001.
What are the annual recoveries been from 2000 or the last 3
or 4 or 5 years?
Mr. Passantino. I can get you all of that information. I
have it right here from fiscal year 2003 forward.
Fiscal year 2003 was $212 million, fiscal year 2004 was
$196 million, fiscal year 2005 was $166 million, fiscal year
2006 was $171 million, fiscal year 2007 was $220 million.
Chairman Miller. And most of that is minimum wage and
overtime violations?
Mr. Passantino. The majority of the damages we recover are,
in fact, for minimum wage and overtime violations.
Chairman Miller. And do you know what percentage of that is
worker complaints? I mean, coming through----
Mr. Passantino. Of the back wages recovered? I don't know
that number.
Chairman Miller. As opposed to investigations? I mean, this
kind of goes to the management question. Do you know if--not
whether you have it in front of you right now--but is that
available to break out?
Mr. Passantino. I suspect that it is. We spend--because we
can track investigator time and actual cases, that we can break
out. Although I am not 100 percent certain, I suspect that we
can break out by complainant directed.
Chairman Miller. Ms. Lasowski, is--do you know if that is
available?
Ms. Lasowski. In terms of back wages assessed and what
wages were agreed to be paid by employers, we do have
information that we obtained from the department over a 10-year
period and can--do have information of that in our statement.
What we did not--what we repeatedly asked for and did not
obtain was how much was actually collected.
Chairman Miller. Collected pursuant to an agreement?
Ms. Lasowski. That is correct. And that was information
that at the time was----
Chairman Miller. Which is different than what was paid to
the employee?
Ms. Lasowski. What was agreed to by the employer to pay or
what was agreed to be in terms of an assessment.
Chairman Miller. Now, wait a minute. What are you
suggesting that some of these employers who have been caught
shorting the employee once shorted them on the payment? That is
a great group of people.
Ms. Lasowski. The information, we understand, is available
in financial accounting system, but when we asked for those
types of breakout and information or even looked for it in any
of its public reports or Web site, we were not able to find
what the actual collection was. The only information that we
have available broken out by year is what has been assessed or
what the employer----
Chairman Miller. Mr. Passantino, can we get that for the
committee?
Mr. Passantino. We have that information, and I--the
communications between the Wage and Hour Division and GAO
indicated that information was available, it just was not
available from the system that GAO was using. It comes from our
backwage system, and I believe I testified earlier in response
to someone's question that, for the last fiscal year, it was 93
percent of back wages agreed to pay that were collected.
Chairman Miller. Ms. Lasowski?
Ms. Lasowski. In terms of the back wages assessed and what
was agreed to by the employers, our evaluation of what was
assessed indicated that 90 percent of the time the employer
agreed to pay back wages. But, once again, we wanted specific
information on what was actually collected, and planning
enforcement officials were not able to provide us with that
information.
Chairman Miller. Okay. Well, we need to get that
information, Mr. Passantino.
Now, some of this is self-initiated. You had the big Wal-
Mart case, where they walked through the door and were looking
for justice. So that was $30 million. So you get this big bump
in 2007--one of that is $30 million of $220 bumps you up big
time.
How many of those do you do a year, where they walk in and
recognize that they are probably better off in dealing with you
than----
Mr. Passantino. How many cases do we do where an employer
comes to us and says, ``I want to pay back wages''?
Chairman Miller. Of that--certainly, of that size, not
many; right?
Mr. Passantino. Of that size, not a whole lot of, you know,
significant size. There have been several over the past couple
of years. I am not familiar with the specific numbers on that.
Chairman Miller. I think that would be helpful. I am just
trying to determine because, you know, it sounds like a minor
item when somebody gets told on the phone, ``You don't have a
case,'' or what have you, but if the people who do call and, as
you screen them, they turn out developing a significant--these
complaints turn out developing a significant amount of what you
eventually collect, I would just like to--I would like to know
that breakdown and what of the $220 is self-initiated.
Your investigations--I think you may have this
information--maybe I am just not doing it right--and wage and--
I mean, minimum wage and overtime violations, which I think run
about $170 to 80 million--something like that--most years.
Mr. Passantino. And just so we are clear, it was more than
simply a financial recovery on behalf of those employees. As a
result of that settlement agreement, there was a consent decree
that pertained to----
Chairman Miller. That they obey the law.
Mr. Passantino. I am sorry?
Chairman Miller. That they would obey the law.
Mr. Passantino. We put them under an injunction, and it
makes it a lot easier for us to enforce in the future because
now we have an injunction that they will be in contempt of
court if they violate the law in the future.
Chairman Miller. What do you do with recidivists?
Mr. Passantino. We have----
Chairman Miller. I mean the IRS--every now and then you go
to your favorite restaurant, there is a notice on the door that
somebody forgot to pay their taxes and you can go somewhere
else to get your dinner.
What do you do? I know in the early garment, you know, back
years ago, when I was chair of the subcommittee here, in the
garment industry we were seizing goods out of Los Angeles and
Chicago and New York. But you can't seize a business; right?
You don't have the authority?
Mr. Passantino. The hot ditch provision allows us to get an
injunction that will prohibit the shipment of certain goods----
Chairman Miller. Right. Right. But you don't have the right
to----
Mr. Passantino [continuing]. Violation of----
Chairman Miller [continuing]. Prohibit somebody to open for
dinner at 5:00 o'clock tonight?
Mr. Passantino. Not that I am aware of, no.
Chairman Miller. Well----
Mr. Passantino. But in response to your----
Chairman Miller [continuing]. I would assume----
Mr. Passantino [continuing]. question about recidivism----
Chairman Miller. We will have to look at this because I
would assume that people's wages would be every bit as
important as taxes somewhere out there in the----
Ms. Bobo. But we could put all the wage violators on a Web
site and put their names and the information.
Chairman Miller. Shame.
Ms. Bobo. Other government agencies do that sort of thing.
We could--Wage and Hour could do it.
Chairman Miller. Or we could--and then collect the money.
Ms. Bobo. Absolutely.
Chairman Miller. I will take the second choice, and then we
can put the names on the Web site.
Well, I am going to let you go. You have been very generous
with your time, but I am not completely satisfied here with
respect to the process that is in place to assure that people
with legitimate claims--or in the case of Mr. Kutz's studies--
validated legitimate claims are unable to recover their wages.
And I think we all stipulate here at the table and then both
sides of the dais here that this agency is strapped. I am--you
know, but from 2001 to 2007, there was a constant request to
decline the number of people in this agency, and this year,
hopefully, we get through this appropriations process, there
will be an increase in this Congress and in this fiscal year.
But no matter what the number of people, I am concerned
that Ms. Lasowski's study raises questions about whether or not
data is being used in the most beneficial way to deploy the
assets in this agency. And then when you come back with Mr.
Kutz's examples of where appears to be clearly worthy cases in
some cases that, in fact, had even been resolved by the agency
that people owed the money and people admitted they owed the
money and then they just decided they weren't going to pay it.
That is just--that just won't work. I mean, again, we know that
in most of these instances we are working with people with in
low-wage occupations and with, you know, very difficult means
to meet their obligations of them and their families.
So this is a continuing effort and a continuing
investigation, but we have got to be able to improve the
performance. And part of that falls on the Congress to provide
the resources and the administration to provide the resources.
But even as we do that, I take very seriously this question of
whether or not we are really providing for the best
implementation of the knowledge that potentially you have that
you may not be gathering and using to the benefit of these
workers. But we will continue that conversation.
Thank you very much for your time and for your expertise.
We will have--I will have several questions I would like to
submit in writing, and I don't know if the other members will,
but we would expect you to respond to those questions. And as I
mentioned earlier, members will have 14 days to submit
materials or questions on this hearing record.
And with that the--do you have any other requests? No, you
are fine; right?
The committee stands adjourned.
[The statement of Mr. Altmire follows:]
Prepared Statement of Hon. Jason Altmire, a Representative in Congress
From the State of Pennsylvania
Thank you, Chairman Miller, for holding this important hearing on
the enforcement of wage and hour laws by the Department of Labor.
Last month marked the 70th anniversary of the Fair Labor Standards
Act, law that requires employers to pay their workers at least the
minimum wage and at least time-and-a-half for overtime work. The FLSA
equips the DOL with the resources it needs to protect employees and
combat wage theft. However, a new report done by the Government
Accountability Office suggests that the DOL is failing to fully
investigate and address violations of FLSA.
Today we will hear testimony from several witnesses, including a
representative from the GAO and DOL, to determine if the DOL is in fact
doing all that it can to stop wage theft. I look forward to hearing
about how the DOL plans to address the inadequacies cited in the GAO
report.
Thank you again, Mr. Chairman, for holding this hearing. I yield
back the balance of my time.
______
[The statement of Ms. Sanchez follows:]
Prepared Statement of Hon. Linda T. Sanchez, a Representative in
Congress From the State of California
Thank you, Mr. Chairman, for convening today's hearing on wage
theft, an important issue that is too often overlooked. In 1938,
Americans celebrated when newly enacted federal legislation created
minimum wage and maximum hour standards for all workers. The Fair Labor
Standards Act gave American workers assurances that they would work
reasonable hours and be paid reasonable wages.
The FLSA was a tremendous victory for laborers across the country.
Unfortunately, there is now a significant disconnect between the
protections promised to workers and protections that workers actually
receive. Many employers in this country do not pay their employees the
full amount owed for actual work performed. Wage theft happens across
the board, regardless of an employee's age, race, sex, geographic
location, wage rate, or industry.
Our federal labor statutes tell workers that they will receive a
minimum wage, they will get time and half for overtime work, and that
they will earn a prevailing wage for work on federal property. Most
importantly, our statutes tell them that these things are not
suggestions, but rights that the federal government will help enforce.
As we will explore today, that promise has been betrayed.
The burden of recovering fair wages when they have been denied
should not rest entirely on the shoulders of workers. The federal
government should vigorously enforce its own laws. Unfortunately, under
the current Administration, this is not the case. Just as it has
ignored its responsibility to protect the environment from polluters
and to protect consumers and small businesses from anti-competitive
trusts, it has ignored its responsibility to protect hourly employees
from wage theft by their employers.
This Congress has secured many protections for American workers,
including increasing the minimum wage and approving a plan to provide
paid family leave to federal employees. There is no worker protection
as basic, however, as ensuring that a person actually receives the
wages owed for work performed.
Mr. Chairman, all American workers are entitled to receive the
wages that they earn. I'm disappointed that this basic principle has
not been respected by the Bush Administration. But I am grateful that
you're holding this hearing to expose this failure and look forward to
working with you to address it.
______
[Questions for the record and their subsequent responses
follow:]
[VIA FACSIMILE]
U.S. Congress,
Washington, DC, July 21, 2008.
Mr. Alexander Passantino, Acting Administrator,
Wage and Hour Division, U.S. Department of Labor, Washington, DC.
Dear Mr. Passantino: Thank you for testifying at the July 15, 2008
full Committee hearing, ``Is the Department of Labor Effectively
Enforcing our Wage and Hour Laws?'' Enclosed are the questions which
Committee members have asked you to respond for the record. Please send
an electronic version of your written response to the Committee staff
by Tuesday, July 29, 2008, the day on which the record closes. If you
have any questions, please contact the committee.
Sincerely,
George Miller,
Chairman.
Questions from Chairman Miller
We discussed during the hearing that there were situations where an
employer recognizes that it is easier, and probably cheaper, to
approach the Department and agree to pay back-wages than to go through
private litigation with employees. In one instance, Wal-mart self-
initiated a back payment of around $30 million. Please provide a
breakdown, by year, of the total amount of back-wages your office has
collected, and of that number, how much was employer self-initiated.
During the hearing, Mr. Kutz (of the Government Accountability
Office) discussed some of the problems his staff has faced with their
investigation. In one situation, the head of the Dallas field office
asked his staff to leave the office while the GAO staff interviewed
him. You said you were unaware of this particular incident and would
assure the Committee that your staff is fully cooperating with the GAO
investigation. I would appreciate an explanation surrounding this
interview, as well as your commitment that Wage and Hour staff will
fully cooperate with the GAO investigation going forward.
In their testimony, GAO described some of the investigative work
performed by WHD, which consisted of nothing more than a phone call. In
some cases, GAO was easily able to find information about the location
and existence of businesses that Wage & Hour investigators could not.
What is the minimum that a Wage & Hour investigator must do to complete
a successful investigation? And, do you consider these cases outlined
by GAO to be successfully resolved?
It's clear that a growing population of the American workforce are
not fluent in the English language. They may understand enough to do
their jobs and to navigate their communities, but many may not
understand all of their rights as workers, and how to assert those
rights to employers. What efforts has your office made to educate and
post materials to workers in languages other than English? Does the
division make it an initiative to recruit investigators who are
multilingual?
Your office has recently changed the operating hours of its
national hotline from 8 am to 5 pm ET to 8 am to 8 pm ET--what was the
impetus for this change and have you received a greater number of
complaints from workers on the West Coast since changing the hours? Do
you think that the additional three hours is adequate?
Other DOL agencies such as the Occupational Safety and Health
Administration (OSHA) posts employer information on their website so
that workers and the public can view which employers have complaints
against them, have reached settlement agreements, and judgments against
them. Does the WHD have a position on this type of disclosure?
How many of the complaints you receive from workers are made
against companies who are federal contractors? If WHD finds that these
complaints have merit, what additional steps are taken against the
contractor, including but not limited to suspension and debarment from
future federal contracts?
We heard during the hearing, and from other GAO reports that many
employers throughout the country are purposely misclassifying their
workers to avoid compliance with FLSA. What efforts has your office
made in the area of identifying and prosecuting these employers? And,
given the documented cases where repeat offenders of FLSA have gone
unpunished, are there immediate plans to use the FLSA's stronger
remedial provisions of fines and imprisonment against future willful
violations?
Ms. Lasowski's (of the Government Accountability Office) testimony
reported that there were policy differences between field offices on
handling complaint phone calls. I seek the written policy for each
field office on handling these complaints.
Additionally, Mr. Donald Payne (NJ-10) and I both had concerns that
Ms. Lasowski reported that the data the GAO received from your office
only represented the total amount of money employers agreed to pay
workers, rather than the amount of money that was actually paid to
workers. WHD asserted that it ``recovered'' more than $1.25 billion for
nearly two million workers since 2001. Please provide the Committee
with a description of the policies and procedures WHD follows to ensure
that employers who have agreed to pay money to employees, actually pay
the correct employee (this description should include any policies and
procedures addressing difficult to locate employees such as immigrant
workers). In addition, please provide the Committee with the portion of
the total of $1.25 billion that WHD can confidently claim was actually
paid to the correct employee owed money, listed by year.
______
------
[Newspaper article submitted by Mr. Courtney follows:]
[Article from the New York Times, July 15, 2008]
Department Is Criticized on Disputes Over Wages
By Steven Greenhouse
The Government Accountability Office sharply criticizes the Wage
and Hour Division of the Labor Department in two reports to be issued
on Tuesday, saying it mishandled many overtime and minimum-wage
complaints and delayed investigating hundreds of cases for a year or
more.
The G.A.O. also criticizes the division for greatly reducing the
number of enforcement actions it takes each year and for not focusing
on the low-wage industries where, one report said, it is most likely to
find violations.
The accountability office, the investigative arm of Congress,
singled out a case in which a truck driver for an alcohol distributor
complained that he was not paid overtime even though he worked 55 hours
a week. The Wage and Hour Division waited 17 months before assigning an
investigator, the office found, and the investigator dropped the case
six months later--after doing virtually no investigating--having
concluded that the two-year statute of limitations was about to expire.
The office cited another case in which a gas station cashier
earning $7.50 an hour complained about not receiving her final
paycheck. One of the owners acknowledged that to the wage investigator
and said to call back in five days when his partner returned. The
investigator did call five days later, but after the gas station did
not return several calls, the investigator dropped the case.
The G.A.O., which will release its reports at a hearing of the
House Education and Labor Committee, also faulted the wage division for
reducing the number of enforcement actions it pursues each year to
29,584 in the 2007 fiscal year, down 37 percent from 46,758 10 years
earlier.
According to his prepared remarks, Representative George Miller,
Democrat of California and chairman of the Education and Labor
Committee, will tell the hearing, ``Although the Department of Labor
currently has the necessary tools to fight wage theft, the G.A.O.
investigation suggests that the problem of wage theft is only getting
worse because of weaker enforcement.''
The Wage and Hour Division defended its performance, saying it
reduced the number of enforcement actions largely because it was
focusing on more time-consuming, comprehensive investigations. Other
reasons it gave were improved screening of complaints to eliminate
those that may not be violations and a decrease in the number of
investigators covering more than 100 million workers--to 732 in the
2007 fiscal year from 945 in 2001.
In a fact sheet, the Labor Department noted that the back wages
collected by the Wage and Hour Division more than doubled to
$220,613,703 in 2007 from $96,719,108 in 1997. It said that 341,624
employees received back wages in 2007, up from 189,244 10 years
earlier.
One G.A.O. report noted that the back wages collected per case had
nearly doubled to $10,500 in 2007, from $5,400 in 2000.
The Labor Department said the ``Wage and Hour Division is
delivering pay for workers, not a payday for trial lawyers.''
In a report that took a close look at 15 wage cases and sifted
through Labor Department data, the G.A.O. concluded that the Wage and
Hour Division had inappropriately rejected complaints based on
incorrect information provided by employers, failed to make adequate
efforts to locate employers and did not thoroughly investigate and
resolve complaints.
The accountability office said it found more than 100 cases that
were closed because the wage division could not locate an employer, and
350 cases that were assigned to an investigator more than a year after
the complaint was received.
One report examined a case in which a pool maintenance technician
had complained about not receiving a final paycheck. The employer
admitted that it did not issue that check, but then berated the wage
investigator, saying it would not pay the back wages. Afterward, the
investigator dropped the case.
In another case, a homeless woman who worked as a night attendant
at an assisted-living facility complained that she had not been paid
any wages for more than a year. The employer argued that it did not
have to pay wages because it provided her with room and board. The Wage
and Hour Division concluded that the employer owed her $4,500, but the
investigator nonetheless dropped the case after the employer asserted
in August 2006 that it was in such dire shape that it did not have any
money to pay back wages. The G.A.O. noted that the employer was still
in business.
``In too many cases,'' Mr. Miller said, ``investigators from the
Wage and Hour Division simply drop the ball in pursuing employers that
cheat their employees out of their hard-earned wages.''
The G.A.O. said the wage division focused on the same industries in
2007 as in 1997 despite recommendations that it focus on low-wage
industries where wage violations were most likely to occur.
``As a result,'' the office wrote, ``the Wage and Hour Division may
not be addressing the needs of workers most vulnerable to Fair Labor
Standards Act violations.''
But the Wage and Hour Division said it had broadened its efforts
beyond agriculture, health care and apparel manufacturing to include
other low-wage businesses, including day care, restaurants,
construction and hotels.
______
[Whereupon, at 1:00 p.m., the committee was adjourned.]