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Democrats Seek to Bolster Wage and Hour Enforcement

July 15, 2008
Related Topics: Compensation Design and Communication, Labor Relations, Wages and Hours, Latest News
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House Democrats want to put more teeth into the federal agency that helps workers collect pay that has been wrongly denied by their employers, but the thrust of their efforts probably won’t come until next year.

At a House Education and Labor Committee hearing on Tuesday, July 15, the Government Accountability Office released a study showing that enforcement actions by the Department of Labor’s Wage and Hour Division have fallen by more than one-third in the past decade—from 47,000 in 1997 to 30,000 in 2007.

The GAO, the investigative arm of Congress, asserted that the agency is short-staffed, fails to effectively utilize resources available for investigations, poorly targets industries where wage violations are likely to occur and does not properly assess its own performance.

A separate GAO case study stated that the division “inappropriately rejected complaints, failed to adequately investigate complaints or neglected to investigate until it was too late.”

Alexander Passantino, acting administrator of the Wage and Hour Division, charged that the GAO study was flawed. He touted his agency’s success during the past 10 years in collecting back wages—an increase from $96.7 million in fiscal year 1997 to $220.6 million in fiscal 2007.

The division enforces the Fair Labor Standards Act. Most of its activity focuses on situations where employers violate minimum wage and overtime standards or withhold a final paycheck.

Democrats at the hearing labeled such practices “wage theft” that particularly hurts low-income workers who are most vulnerable during an economic downturn.

Rep. George Miller, D-California and chairman of the committee, acknowledged in an interview after the hearing that there is not enough time left on the congressional calendar this year to move legislation related to wage and hour compliance.

But he vowed to continue pursuing the issue next year.

“Clearly some of the enforcement tools have to be strengthened,” he said. “They sparingly use stepped-up enforcement. They have to rethink that.”

Miller was referring to a GAO finding that the Wage and Hour Division assessed civil monetary penalties only 6 percent of the time from 2000 to 2007.

In an interview, Passantino said his agency is limited in its ability to fine companies. It can only do so if a firm is a repeat or willful violator. The agency also is prevented from seeking liquidated damages.

Passantino maintained that an emphasis on punishment could undermine the ability of workers to collect the pay owed to them.

“There are tradeoffs,” he said, pointing out that employees can get money in their pockets faster through settlements with companies than through protracted court cases.

Weak enforcement wasn’t the only problem that bothered Miller during the hearing. He also railed against Passantino for poor field office management that prevents timely response to worker complaints.

“I would have a lot of trouble if I was on the other end of the phone trying to recover wages,” Miller said. “That may not be the standard that workers in this country deserve.”

Committee Republicans were more sympathetic toward the agency. Rep. Howard “Buck” McKeon, R-California and the ranking member of the panel, praised it for collecting $1.25 billion for nearly 2 million workers since 2001.

He cautioned against efforts “to politicize the work of the Wage and Hour Division.” He also said Democrats were ignoring other “pocketbook issues … in particular, the burden of the high cost of gasoline” on workers’ wages.

For Democrats, the point is that workers have to get paid before they can start spending on necessities.

“Wage theft affects everyone from poultry workers to construction workers, nursing home employees to retail employees, farm workers to landscapers,” Miller said.

—Mark Schoeff Jr.

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