The Government Accountability Office (GAO) recently released a report and congressional testimony concerning its investigation of the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD). The GAO concluded that the “WHD frequently responded inadequately to complaints, leaving low wage workers vulnerable to wage theft.” This article summarizes the GAO’s report, DOL Secretary Hilda Solis’ response to the report, and what it all means to employers.
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GAO report highlights
In July 2008, the GAO revealed the results of its initial investigation into the practices of the WHD. It concluded that the WHD (1) inappropriately rejected worker complaints based on incorrect information provided by employers, (2) failed to make adequate attempts to locate employers, (3) did not thoroughly investigate and resolve complaints, and (4) delayed the initiation of investigations for more than a year. At the request of the U.S. House of Representatives’ Committee on Education and Labor, the GAO performed additional audit and investigative work to determine the magnitude of the issues at the WHD.
The GAO recently released the report and congressional testimony highlighting its findings in the follow-up investigation. After undercover GAO investigators posed as both fictitious complainants and employers, and after an audit of closed WHD cases, the GAO determined that the WHD’s (1) response time was sluggish, (2) complaint intake process was poor, and (3) conciliation attempts failed. Specifically, the GAO noted the following examples:
- the WHD failed to investigate a child labor complaint alleging that underage children were operating hazardous machinery and working during school hours;
- a WHD investigator lied to an undercover GAO investigator about confirming a fictitious business’ sales volume with the IRS and did not investigate further;
- the WHD successfully investigated one out of 10 fictitious cases;
- complaints were reported as successfully paid when, in fact, the fictitious complainants reported to the WHD that they had not been paid;
- the WHD failed to follow up with employers that agreed to pay;
- it dropped cases simply because the employer did not return telephone calls;
- it didn’t respond to one complainant for more than a year; and
- complaints were not recorded in the WHD’s database.
Ultimately, the GAO concluded that “the Department of Labor has left thousands of actual victims of wage theft who sought federal government assistance with nowhere to turn.”
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As Labor Secretary Hilda Solis said, “There’s a new sheriff in town.” Solis’ response to the GAO’s report was swift. Specifically, she stated that she is “committed to ensuring that every worker is paid at least the minimum wage, that those who work overtime are properly compensated, that child labor laws are strictly enforced[,] and that every worker is provided a safe and healthful environment.” To that end, the WHD will be adding 250 new field investigators — a staff increase of more than a third — to “reinvigorate the work of [an] important agency” and “refocus the agency on [its] enforcement responsibilities.”
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So, what does this all mean for employers? With the DOL’s heightened emphasis on wage and hour compliance, there are several steps employers need to take:
- Job classifications. Review classifications to ensure that employees are properly classified as exempt or nonexempt.
- Payroll deductions. Assess payroll deductions to make certain they are compliant with both federal and state law.
- Working time. Evaluate payroll practices to determine whether working time is appropriately compensated (e.g., on-call time, travel time, and interrupted meal breaks).
- Overtime calculation. Audit overtime calculations to ensure that all required compensation is included in determining an employee’s regular rate.
- Furloughs and reduced-hour schedules. Examine implemented cost-saving measures, such as furloughs or reduced-hour schedules, to make certain they are compliant with the law.
- Child labor. If an employers has any children working for it, confirm that they are working in permitted positions and during permitted hours.
- Record-keeping requirements. Inspect payroll records to ensure that they are accurate and maintained in accordance with the law.
By being proactive and conducting a self-audit, you will be able to identify and correct problems before the DOL launches a full-blown and costly investigation.
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