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Democrats Vow to Strengthen Wage Enforcement Agency

March 26, 2009
An investigation by a government watchdog concludes that the division of the Labor Department responsible for enforcing pay laws often ignores complaints and fails to make companies restore improperly withheld wages.

The Government Accountability Office report, which was released at a Wednesday, March 25, hearing of the House Education and Labor Committee, is based in part on an undercover operation.

The GAO submitted 10 common but fictitious complaints to Wage and Hour Division field offices and also reviewed 20 real cases affecting 1,160 workers. The GAO is the investigative arm of Congress.

It found that the Wage and Hour Division failed to address or adequately investigate alleged minimum-wage and overtime violations and charges that a worker did not receive a final paycheck. Child-labor violations also were ignored.

Calls often rolled over to voice mail and were never returned. In one case study, a company agreed to $66,000 in overtime back pay to 21 employees but then stopped responding to the wage division. After more than a year, the agency dropped its action against the company.

“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,” the GAO report states. “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.”

Labor committee Republicans suggested that the hearing was politically motivated.

While it was taking place, Secretary of Labor Hilda Solis released a statement saying the department would hire 250 new wage and hour field investigators.

“The U.S. Department of Labor is the voice for working families, and I am dedicated to ensuring compliance with federal labor laws to both strengthen our economy and protect workers in this country,” Solis said.

Her move—and the GAO report—dovetail with efforts by congressional Democrats to bolster wage and hour enforcement.

The agency has a staff of about 1,000 and processed about 32,000 charges in 2007. Gregory Kutz, GAO managing director of forensic audits and special investigations, said that about 19 percent of the cases are mishandled.

Rep. George Miller, D-California and chairman of the House labor committee, repeatedly used the term “wage theft” and expressed frustration that companies can skirt penalties by delaying pay disputes beyond the two-year limit on investigations.

“You steal [money] out of a paycheck, you’re free,” Miller said. “You steal it out of petty cash, you go to jail.”

At the end of the GAO probe, the Wage and Hour Division still had not begun to look into three of the undercover test cases, according to Kutz. The delays ranged from two to five months.

The investigation was a follow-up to a GAO report in July that showed that the wage agency responded poorly to allegations of minimum-wage and overtime violations.

Labor committee Republicans agreed that Wage and Hour Division failings should be addressed. But they complained that the hearing was more for show than substance because it did not include a Department of Labor witness to respond to the GAO investigation.

Rep. Howard “Buck” McKeon of California, the ranking Republican on the labor panel, suggested that the meeting was held to “beat up on the Bush administration.”

“At some point, we should be serious about fixing the problem,” McKeon said. “I just want to make sure we’re not playing a game of political blame.”

In the coming weeks, the GAO will offer recommendations to Congress for improvements to the Wage and Hour Division. They will include ways to increase voluntary compliance with pay laws, according to Kutz.

“The vast majority of companies in this country are going to want to do the right thing,” he said.

—Mark Schoeff Jr.

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