Department of Labor:

Wage and Hour Division Needs Improved Investigative Processes and Ability to Suspend Statute of Limitations to Better Protect Workers Against Wage Theft

GAO-09-629: Published: Jun 23, 2009. Publicly Released: Jul 23, 2009.

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The mission of the Department of Labor's Wage and Hour Division (WHD) includes enforcing provisions of the Fair Labor Standards Act (FLSA), which is designed to ensure that millions of workers are paid the federal minimum wage and overtime. Conducting investigations based on worker complaints is WHD's priority. On March 25, 2009, GAO testified on its findings related to (1) undercover tests of WHD's complaint intake process, (2) case study examples of inadequate WHD responses to wage complaints, and (3) the effectiveness of WHD's complaint intake process, conciliations (phone calls to the employer), and other investigative tools. To test WHD's complaint intake process, GAO posed as complainants and employers in 10 different scenarios. To provide case study examples and assess effectiveness of complaint investigations, GAO used data mining and statistical sampling of closed case data for fiscal year 2007. This report summarizes the testimony (GAO-09-458T) and provides recommendations.

GAO found that WHD frequently responded inadequately to complaints, leaving low wage workers vulnerable to wage theft and other labor law violations. Posing as fictitious complainants, GAO filed 10 common complaints with WHD district offices across the country. These tests found that WHD staff deterred fictitious callers from filing a complaint by encouraging employees to resolve the issue themselves, directing most calls to voicemail, not returning phone calls to both employees and employers, and providing conflicting or misleading information about how to file a complaint. An assessment of complaint intake processes would help ensure that WHD staff provide appropriate customer service. To hear clips of undercover calls illustrating poor customer service, see http://www.gao.gov/media/video/gao-09-458t/. According to WHD policies, investigators should enter all reasonable complaints into WHD's database. However, even though all of GAO's fictitious complaints alleged violations of the laws that WHD enforces, 5 of 10 complaints were not recorded in WHD's database. In addition, WHD policy in one region instructs staff not to record the investigative work done on small cases in which the employer refuses to pay, making WHD appear better at resolving these cases than it is. Reassessing its processes for recording complaints would help WHD ensure that all case information is available. Similar to the 10 fictitious scenarios, GAO identified 20 cases affecting at least 1,160 real employees whose complaints were inadequately investigated by WHD. Five of the cases were closed based on false information provided by the employer that could have been verified by a search of public records, such as bankruptcy records, but WHD investigators do not have access to publicly available or subscription databases. In another case, the employer claimed that the company did not meet the income requirement to be covered under federal law but did not provide documentary evidence. WHD investigators do not have access to income information collected by the Internal Revenue Service and were unable to verify the employer's claim. Obtaining more research tools and implementing information sharing processes with other agencies would assist WHD in verifying employer-provided information. GAO's overall assessment found ineffective complaint intake and investigation processes. WHD officials often told GAO that WHD lacks the resources to conduct an investigation of every complaint, allowing employers in some small cases to avoid paying back wages simply by refusing to pay. GAO found that WHD's investigations were often delayed by months or years. Monitoring the extent to which WHD staff are able to handle the volume of complaints would provide assurance that WHD has sufficient resources available. Under FLSA, the statute of limitations is 2 years from the date of the violation, meaning that every day that WHD delays an investigation, the complainant's risk of becoming ineligible to collect back wages increases. However, in several offices, backlogs prevent investigators from initiating cases within 6 months. Suspending the statute of limitations during a WHD investigation would prevent employees from losing back wages due to delays.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to our recommendation, as of August 2013, the Department of Labor's Wage and Hour Division (WHD) had hired or made selections to hire approximately 350 new investigators. By hiring new investigators, WHD has taken important steps towards improving its processes for recording and responding to wage theft complaints.

    Recommendation: To improve processes for recording and responding to wage theft complaints, and to provide assurance that WHD has adequate human capital and resources available to investigate wage theft complaints, the Administrator the Secretary of Labor should direct the Administrator of WHD to monitor the extent to which new investigators and existing staff are able to handle the volume of wage theft complaints, and if inadequate, what additional resources may be needed.

    Agency Affected: Department of Labor

  2. Status: Closed - Implemented

    Comments: Between July 2011 and January 2013, the Department of Labor (DOL) entered into Memorandums of Understanding (MOU) with the IRS and 14 states to share information with federal and state partners in order to target misclassification of employees. By entering into these MOUs to share information, DOL's Wage and Hour Division (WHD) has taken important steps towards improving its processes for recording and responding to wage theft complaints by acquiring new tools for verifying information provided by employers under investigation.

    Recommendation: To improve processes for recording and responding to wage theft complaints, and to assist in the verification of information provided by employers under investigation, the Secretary of Labor should direct the Administrator to explore gaining access to information maintained by IRS and other agencies as needed through voluntary consent from businesses being investigated.

    Agency Affected: Department of Labor

  3. Status: Closed - Implemented

    Comments: Wage and Hour Division (WHD) gave district offices access to the automated research tool Public Access to Court Electronic Records (PACER), which allows users to electronically access bankruptcy case information. In addition, WHD revised their Field Office Handbook to require staff to verify employer-provided information with the bankruptcy court and include documentation in the case file. Giving staff in district offices access to PACER and requiring them to document bankruptcy information will allow WHD to avoid improperly closing cases based on employer-provided bankruptcy information.

    Recommendation: To improve processes for recording and responding to wage theft complaints, and to improve the efficiency and effectiveness of WHD personnel handling wage theft complaints, the Secretary of Labor should direct the Administrator to explore providing more automated research tools to WHD personnel that would allow them to identify key information used in investigating complaints such as bankruptcy filings, annual sales estimates for businesses, and information on additional names and locations of businesses and individuals under investigation.

    Agency Affected: Department of Labor

  4. Status: Closed - Implemented

    Comments: As of August 2013, the Department of Labor's Wage and Hour Division (WHD) had completed an internal evaluation of its complaint intake and customer service policies and procedures. According to WHD, the results of this review informed revisions to its Field Operations Handbook. WHD also reintroduced customer service goals and measures in its annual performance plan. By performing this evaluation, revising its handbook, and incorporating customer service goals and measures, WHD has taken important steps towards improving its processes for recording and responding to wage theft complaints.

    Recommendation: To improve processes for recording and responding to wage theft complaints, the Secretary of Labor should direct the Administrator to provide assurance that WHD personnel interacting with complainants and employers appropriately capture and investigate allegations of labor law violations, and provide appropriate customer service, the Administrator should conduct an assessment of WHD's complaint intake and resolution processes and revise them as appropriate.

    Agency Affected: Department of Labor

  5. Status: Closed - Implemented

    Comments: Wage and Hour Division (WHD) revised its Field Office Handbook (FOH) to require that all violations under WHD's jurisdiction be entered into WHD's database, including complaints in which more information is needed to determine whether a violation occurred. In addition, the revised FOH requires that WHD staff record actions taken on all conciliations, including those in which the employer refuses to pay. In November 2009, WHD provided training on these new procedures to all staff. Recording complete information about conciliations will provide more accurate information about investigative success rates for WHD management and prevents WHD from losing track of complaints made and investigative work performed.

    Recommendation: To improve processes for recording and responding to wage theft complaints, the Secretary of Labor should direct the Administrator to reassess current policies and processes and revise them as appropriate to better ensure that relevant case information is recorded in WHD's database, including all complaints alleging applicable labor law violations regardless of whether the complaint was substantiated, and all investigative work performed on conciliations, regardless of whether the conciliation was successfully resolved.

    Agency Affected: Department of Labor

  6. Status: Closed - Not Implemented

    Comments: Although bills (S 3877; HR 3303) were introduced in the 111th Congress to effect this recommendation, they never made it out of committee and no bills have been introduced in subsequent congresses.

    Recommendation: Our work documented several cases in which the employees' right to file a private lawsuit was constrained by WHD's delays, resulting in hundreds of thousands of dollars of identified wage theft going uncollected. Therefore, Congress may wish to consider authorizing suspension of the statute of limitations while an investigation by WHD is ongoing.

    Agency Affected: Congress

 

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