03.25.09
“Those most vulnerable to wage theft are likely bearing the brunt of our nation’s economic crisis,” said U.S. Rep. George Miller (D-CA), chairman of the House Education and Labor Committee, who requested the investigation. “We owe it to all hard working Americans to ensure that we correct the incompetence of the Bush administration and ensure families are not being cheated out of their wages by unscrupulous employers. This was a massive failure. Former Secretary Chao was absent without leave.”
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The GAO found that the Wage and Hour Division’s complaint intake, complaint resolution, and investigation processes were ineffective and discouraged workers from lodging wage theft complaints. In several of the division’s regional offices, staff were directed to only record successful complaint resolutions in its database, making the Wage and Hour Division statistics appear better than they were. In addition, the GAO found that because of the lack of resources and staff, investigations on wage theft and child labor violations were frequently delayed by months or years.
“This investigation clearly shows that the Department of Labor has left thousands of actual victims of wage theft who sought federal government assistance with nowhere to turn,” said Gregory Kutz, GAO’s managing director of forensic audits and special investigations, “Far too often many of America’s most vulnerable workers find themselves dealing with an agency concerned about resource limitations, with ineffective processes, and without certain tools necessary to perform timely and effective investigations of wage theft complaints. Unfortunately, far too often the result is unscrupulous employers taking advantage of our country’s low wage workers.”
Over a period of several months, GAO investigators filed ten fictitious complaints with agency district offices across the country, posing as both the employee and the employer. Of the ten complaints that were made, only one was successfully resolved. The GAO also reported that after reviewing the agency’s complaint database, only five of ten fictitious complaints were logged into the system weeks later.
In one case, an undercover investigator called the agency to complain about children working with saws and meat grinders, illegal under child labor laws, during the school day. Although the agency states that investigating child labor violations is a top priority, the call was never investigated or logged into the complaint database.
To listen to this call, click here.
In another undercover call, a Wage and Hour employee told the GAO investigator that they could not follow up on the complaint because the IRS said that his employer was not big enough to be covered under the law. As the GAO testified, though the company was a fictitious and had never filed a tax return, Wage and Hour employees do not have access to IRS data. The Wage and Hour employee was referred to the Department of Labor Office of Inspector General for administrative action.
To listen to this call, click here.
In addition, the GAO audited Wage and Hour Division’s database and sampled several dozen cases to determine whether they were properly handled. Just as the undercover calls highlighted, many times, when employers declined to pay back wages – even if employers admit wages were owed – the division was likely to drop the investigation and inform the complainant the right to sue in court.
Also, the GAO found that Wage and Hour employees often took the word of employers that they paid workers back wages owed, even if the employee never got paid.
“While some investigators wait for proof of payment before closing the conciliation, others told us that they close conciliations as soon as the employer agrees to pay,” said Kutz. “Even if the employee later tells the investigator that he has not been paid, investigators told us they do not change the outcome of a closed case in the WHD database.”
Today’s hearing follows a July 2008 Education and Labor hearing on wage theft where the GAO presented 15 case studies where the Wage and Hour Division ineffectively enforced the law. The GAO reported then that actions initiated by the Department on wage and hour violations dropped from approximately 47,000 in 1997 to fewer than 30,000 in 2007. And, the use of fines that punish repeat or egregious offenders declined by nearly 50 percent from 2001 to 2007.
To read more about the July 2008 hearing, click here.
To read the GAO’s testimony, click here.
Bush Labor Department Failed to Properly Investigate Wage Theft, GAO Tells House Panel
WASHINGTON, D.C. – The government agency responsible for investigating complaints of minimum wage, overtime and child labor violations left workers vulnerable to unscrupulous employers, the U.S. Government Accountability Office told the House Education and Labor Committee today. The GAO’s conclusions were based on the results of an undercover investigation into the Wage and Hour Division of the U.S. Department of Labor from July 2008 to March 2009.“Those most vulnerable to wage theft are likely bearing the brunt of our nation’s economic crisis,” said U.S. Rep. George Miller (D-CA), chairman of the House Education and Labor Committee, who requested the investigation. “We owe it to all hard working Americans to ensure that we correct the incompetence of the Bush administration and ensure families are not being cheated out of their wages by unscrupulous employers. This was a massive failure. Former Secretary Chao was absent without leave.”
Created with flickrSLiDR.
The GAO found that the Wage and Hour Division’s complaint intake, complaint resolution, and investigation processes were ineffective and discouraged workers from lodging wage theft complaints. In several of the division’s regional offices, staff were directed to only record successful complaint resolutions in its database, making the Wage and Hour Division statistics appear better than they were. In addition, the GAO found that because of the lack of resources and staff, investigations on wage theft and child labor violations were frequently delayed by months or years.
“This investigation clearly shows that the Department of Labor has left thousands of actual victims of wage theft who sought federal government assistance with nowhere to turn,” said Gregory Kutz, GAO’s managing director of forensic audits and special investigations, “Far too often many of America’s most vulnerable workers find themselves dealing with an agency concerned about resource limitations, with ineffective processes, and without certain tools necessary to perform timely and effective investigations of wage theft complaints. Unfortunately, far too often the result is unscrupulous employers taking advantage of our country’s low wage workers.”
Over a period of several months, GAO investigators filed ten fictitious complaints with agency district offices across the country, posing as both the employee and the employer. Of the ten complaints that were made, only one was successfully resolved. The GAO also reported that after reviewing the agency’s complaint database, only five of ten fictitious complaints were logged into the system weeks later.
In one case, an undercover investigator called the agency to complain about children working with saws and meat grinders, illegal under child labor laws, during the school day. Although the agency states that investigating child labor violations is a top priority, the call was never investigated or logged into the complaint database.
To listen to this call, click here.
In another undercover call, a Wage and Hour employee told the GAO investigator that they could not follow up on the complaint because the IRS said that his employer was not big enough to be covered under the law. As the GAO testified, though the company was a fictitious and had never filed a tax return, Wage and Hour employees do not have access to IRS data. The Wage and Hour employee was referred to the Department of Labor Office of Inspector General for administrative action.
To listen to this call, click here.
In addition, the GAO audited Wage and Hour Division’s database and sampled several dozen cases to determine whether they were properly handled. Just as the undercover calls highlighted, many times, when employers declined to pay back wages – even if employers admit wages were owed – the division was likely to drop the investigation and inform the complainant the right to sue in court.
Also, the GAO found that Wage and Hour employees often took the word of employers that they paid workers back wages owed, even if the employee never got paid.
“While some investigators wait for proof of payment before closing the conciliation, others told us that they close conciliations as soon as the employer agrees to pay,” said Kutz. “Even if the employee later tells the investigator that he has not been paid, investigators told us they do not change the outcome of a closed case in the WHD database.”
Today’s hearing follows a July 2008 Education and Labor hearing on wage theft where the GAO presented 15 case studies where the Wage and Hour Division ineffectively enforced the law. The GAO reported then that actions initiated by the Department on wage and hour violations dropped from approximately 47,000 in 1997 to fewer than 30,000 in 2007. And, the use of fines that punish repeat or egregious offenders declined by nearly 50 percent from 2001 to 2007.
To read more about the July 2008 hearing, click here.
To read the GAO’s testimony, click here.
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