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48–054 PDF 2009

GAO’S UNDERCOVER INVESTIGATION: WAGE

THEFT OF AMERICA’S VULNERABLE WORKERS

HEARING

BEFORE THE

COMMITTEE ON 

EDUCATION AND LABOR

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

FIRST SESSION

HEARING HELD IN WASHINGTON, DC, MARCH 25, 2009

Serial No. 111–11

Printed for the use of the Committee on Education and Labor

(

Available on the Internet: 

http://www.gpoaccess.gov/congress/house/education/index.html 
(II)

COMMITTEE ON EDUCATION AND LABOR 

GEORGE MILLER, California, Chairman

Dale E. Kildee, Michigan, Vice Chairman 

Donald M. Payne, New Jersey 

Robert E. Andrews, New Jersey 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Lynn C. Woolsey, California 

Rube ́n Hinojosa, Texas 

Carolyn McCarthy, New York 

John F. Tierney, Massachusetts 

Dennis J. Kucinich, Ohio 

David Wu, Oregon 

Rush D. Holt, New Jersey 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Timothy H. Bishop, New York 

Joe Sestak, Pennsylvania 

David Loebsack, Iowa 

Mazie Hirono, Hawaii 

Jason Altmire, Pennsylvania 

Phil Hare, Illinois 

Yvette D. Clarke, New York 

Joe Courtney, Connecticut 

Carol Shea-Porter, New Hampshire 

Marcia L. Fudge, Ohio 

Jared Polis, Colorado 

Paul Tonko, New York 

Pedro R. Pierluisi, Puerto Rico 

Gregorio Kilili Camacho Sablan,

Northern Mariana Islands 

Dina Titus, Nevada 

[Vacant] 

Howard P. ‘‘Buck’’ McKeon, California, 

Senior Republican Member 

Thomas E. Petri, Wisconsin 

Peter Hoekstra, Michigan 

Michael N. Castle, Delaware 

Mark E. Souder, Indiana 

Vernon J. Ehlers, Michigan 

Judy Biggert, Illinois 

Todd Russell Platts, Pennsylvania 

Joe Wilson, South Carolina 

John Kline, Minnesota 

Cathy McMorris Rodgers, Washington 

Tom Price, Georgia 

Rob Bishop, Utah 

Brett Guthrie, Kentucky 

Bill Cassidy, Louisiana 

Tom McClintock, California 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania

Mark Zuckerman, Staff Director 

Sally Stroup, Republican Staff Director 
(III)

C O N T E N T S 

Page

Hearing held on March 25, 2009 ............................................................................ 1

Statement of Members: 

McKeon, Hon. Howard P. ‘‘Buck,’’ Senior Republican Member, Committee 

on Education and Labor ............................................................................... 4

Prepared statement of ............................................................................... 5

Miller, Hon. George, Chairman, Committee on Education and Labor ......... 1

Prepared statement of ............................................................................... 3

Statement of Witnesses: 

Kutz, Greg, Managing Director, U.S. Government Accountability Office, 

Washington, DC; accompanied by Jonathan Meyer, Assistant Director, 

U.S. Government Accountability Office, Dallas, TX .................................. 8

Prepared statement of ............................................................................... 11

(1)

GAO’S UNDERCOVER INVESTIGATION: WAGE 

THEFT OF AMERICA’S VULNERABLE WORKERS 

Wednesday, March 25, 2009

U.S. House of Representatives 

Committee on Education and Labor 

Washington, DC

The committee met, pursuant to call, at 10:03 a.m., in room 

2175, Rayburn House Office Building, Hon. George Miller [chairman of the committee] presiding. 

Present: Representatives Miller, Kildee, Payne, Woolsey, 

Hinojosa, McCarthy, Tierney, Kucinich, Hare, Courtney, Shea-Porter, Sablan, Titus, McKeon, Petri, Price, and Roe. 

Staff present: Aaron Albright, Press Secretary; Tylease Alli, 

Hearing Clerk; Jordan Barab, Senior Labor Policy Advisor; Chris 

Brown, Labor Policy Advisor; Jody Calemine, Labor Policy Deputy 

Director; Nina DeJong, Investigative Associate; Lynn Dondis, Senior Policy Advisor, Subcommittee on Workforce Protections; Carlos 

Fenwick, Policy Advisor, Subcommittee on Health, Employment, 

Labor and Pensions; Patrick Findlay, Investigative Counsel; David 

Hartzler, Systems Administrator; Ryan Holden, Senior Investigator, Oversight; Stephanie Moore, General Counsel; Alex Nock, 

Deputy Staff Director; Joe Novotny, Chief Clerk; Rachel Racusen, 

Communications Director; Dray Thorne, Senior Systems Administrator; Michael Zola, Chief Investigative Counsel, Oversight; Mark 

Zuckerman, Staff Director; Andrew Blasko, Minority Speech Writer 

and Communications Advisor; Robert Borden, Minority General 

Counsel; Cameron Coursen, Minority Assistant Communications 

Director; Ed Gilroy, Minority Director of Workforce Policy; Rob 

Gregg, Minority Senior Legislative Assistant; Richard Hoar, Minority Professional Staff Member; Alexa Marrero, Minority Communications Director; Jim Paretti, Minority Workforce Policy Counsel; 

Molly McLaughlin Salmi, Minority Deputy Director of Workforce 

Policy; and Linda Stevens, Minority Chief Clerk/Assistant to the 

General Counsel. 

Chairman MILLER [presiding]. Good morning. A quorum being 

present, this oversight hearing on the Committee of Education and 

Labor, ‘‘The GAO Undercover Investigation: Wage Theft of America’s Vulnerable Workers,’’ will now come to order. 

And pursuant to rule 7(c), any member may submit an opening 

statement in writing, which will be made part of the permanent 

record. 
2

And the Chair now recognizes himself for the purposes of making 

an opening statement, and then I will recognize Mr. McKeon, the 

senior Republican on the Committee. 

The Committee on Education and Labor meets this morning to 

examine the results of a Government Accountability Office undercover investigation last year into practices of the Wage and Hour 

Division of the Department of Labor. 

In our first hearing on wage theft in July, we learned that millions of workers were robbed of their hard-earned wages every day. 

GAO testified that the very agency tasked to fight wage theft had 

failed to effectively investigate and properly track the number of 

cases involved in our nation’s minimum wage, overtime, and child 

labor laws. 

In fact, GAO cited 15 case studies that showed the failure of the 

agencies to fully investigate and properly address violations of the 

law. Hundreds of cases were found where the agency did not assign 

an investigator for more than a year after the initial complaint. 

Delays effectively deny justice because of the 2-year statute of limitations on wage theft. 

As a result of their initial investigation, the GAO concluded that 

thousands of complaints handled by the Wage and House Division 

were likely mishandled over the past decade. These failures likely 

resulted in workers receiving little or no restitution at all from 

their employers. 

In light of these initial findings, the Committee asked the GAO 

to continue its investigation and dig deeper to see whether highlighted cases were isolated or a symptom of a larger problem 

throughout the agency. 

This morning, the GAO reports back to the Committee on what 

they learned during their undercover investigation. 

From today’s testimony, it is clear that there are serious problems with the Wage and Hour Division’s ability to effectively enforce the law. The agency has dropped the ball in far too many 

cases in pursuing employers that cheat their workers out of their 

hard-earned wages. 

Some Wage and Hour employees explicitly discouraged GAO undercover investigators posing as workers from filing the complaints. 

Other complaints went unanswered. Anonymous tips of children illegally operating dangerous machinery did not get investigated at 

all. 

Not only was this allegation never investigated, but the complaint did not appear in the agency’s computers that are used to 

track cases. Dropping the ball in child labor complaints could be 

potentially deadly. 

I wish this was not an isolated incident. The GAO found time 

and again complaints were routinely brushed aside, improperly 

tracked, or inadequately investigated. 

I am concerned about the pattern of inaction in properly addressing thousands of cases involving overtime, minimum wage, and 

child labor violations, because these violations of the law are not 

trivial. 

Those most vulnerable to wage theft are likely bearing the brunt 

of our nation’s economic crisis. Families where a breadwinner has 

his or her wages stolen still have rent to pay, mouths to feed, chil-
3

dren to clothe, and medicine to buy. They can’t afford to be paid 

less than what the law says. 

Simply put, when a business pockets wages due its workers, it 

is theft, and it is illegal. Today’s testimony will help inform Congress and the new leadership in the Department of Labor on 

whether additional resources, better training, or improved statutory language are needed. 

We owe it to all hard-working Americans to ensure that the Federal Government lives up to its responsibility to guarantee that 

families are not being cheated out of their wages by unscrupulous 

employers. 

Ultimately, I believe that improving the Wage and Hour Division 

will come down to strong leadership and a renewed commitment to 

enforce the law. I believe that that was lacking in the past administration. I believe that the previous Secretary of Labor was essentially absent without leave with regard to the enforcement of the 

laws on behalf of the safety of workers and the wages of workers. 

I am confident that the Obama administration and Secretary 

Solis are committed to turning this egregious record around and 

ensuring that all workers are treated fairly by their employers and 

their government. 

And I would like now to yield to Mr. McKeon for his opening 

statement. 

[The statement of Mr. Miller follows:]

Prepared Statement of Hon. George Miller, Chairman, Committee on 

Education and Labor 

The Committee on Education and Labor meets this morning to examine the results of a Government Accountability Office undercover investigation last year into 

practices of the Wage and Hour Division of the Department of Labor. 

In our first hearing on wage theft in July, we learned that millions of workers 

are robbed of their hard earned wages every year. 

GAO testified that the very agency tasked to fight wage theft had failed to effectively investigate and properly track a number of cases involving our nation’s minimum wage, overtime, and child labor laws. 

In fact, GAO cited 15 case studies that showed the failures of the agency to fully 

investigate and properly address violations of the law. 

Hundreds of cases were found where the agency did not assign an investigator 

for more than a year after the initial complaint. Delays effectively deny justice because of the two year statute of limitations on wage theft. 

As a result of their initial investigation, the GAO concluded that thousands of 

complaints handled by the Wage and House Division were likely mishandled over 

the past decade. These failures likely resulted in workers receiving little or no restitution at all from their employer. 

In light of these initial findings, the Committee asked the GAO to continue its 

investigation and dig deeper to see whether the highlighted cases were isolated or 

a symptom of a larger problem throughout the agency. 

This morning, the GAO reports back to the Committee on what they learned during their undercover investigation. 

From today’s testimony, it is clear that there are serious problems with the Wage 

and Hour Division’s ability to effectively enforce the law. The agency has dropped 

the ball in far too many cases in pursuing employers that cheat their workers out 

of their hard earned wages. 

Some Wage and Hour employees explicitly discouraged GAO undercover investigators posing as workers from filing complaints. Other complaints went unanswered. 

Anonymous tips of children illegally operating dangerous machinery did not get 

investigated at all. Not only was this allegation never investigated, but the complaint did not appear in the agency computers that are used to track cases. Dropping the ball in child labor complaints could be potentially deadly. 

I wish this was an isolated incident. 
4

The GAO found that time and again, complaints were routinely brushed aside, improperly tracked, or inadequately investigated. 

I am concerned about the pattern of inaction in properly addressing thousands of 

cases involving overtime, minimum wage, and child labor violations. Because these 

violations of the law are not trivial. 

Those most vulnerable to wage theft are likely bearing the brunt of our nation’s 

economic crisis. Families where a breadwinner has his or her wages stolen still have 

rent to pay, mouths to feed, children to clothe, and medicine to buy. They can’t afford to be paid less than what the law says. 

Simply put, when a business pockets wages due to its workers, it is theft. And 

it is illegal. 

Today’s testimony will help inform Congress and the new leadership of Department of Labor on whether additional resources, better training or improved statutory language are needed. 

We owe it to all hard working Americans to ensure that the Federal Government 

lives up to its responsibility to guarantee that families are not being cheated out 

of their wages by unscrupulous employers. 

Ultimately, I believe that improving the Wage and Hour Division will come down 

to strong leadership and a renewed commitment to enforce the law. 

I am confident that the Obama administration and Secretary Solis are committed 

to turning this egregious record around and ensuring that all workers are treated 

fairly by their employers and their government. 

Mr. MCKEON. Thank you, Chairman Miller, and good morning. 

Today’s hearing is about work and pay. It is the energy that 

drives the American dream. Republicans have long believed in the 

value and dignity of work and the rewards that come from it. 

Take welfare reform. Back in the 1990s, Republicans pushed to 

change a system that for decades gave money to people for not 

working. Today, welfare recipients earn their benefits by working 

or training for a new job or taking classes to get the skills they 

need to join the workforce later. 

They are no longer dependent on the government. Instead, government becomes dependent on them as recipients eventually earn 

a living on their own and pay taxes. 

And many years later, I am happy to report that bipartisan welfare reform is still working. From 1996 to 2006, the Heritage Foundation says the number of people receiving welfare dropped by 

nearly 60 percent. 

For these and all American workers, we have a duty to ensure 

that federal workplace laws are enforced, and that brings us to the 

subject of today’s hearing, wage theft. 

Mr. Chairman, I am not sure this is the best language to discuss 

the whole range of issues that need our attention in this area. The 

allegations we are examining are not always theft as we know it. 

The U.S. Department of Labor’s Wage and Hour Division is responsible for enforcing a whole host of workplace laws. 

For instance, we will hear today about alleged violations of child 

labor laws. This isn’t a question of so-called wage theft, but it is 

an equally important concern. 

Rather than using politically charged language, I think we 

should ease the rhetoric and focus on the serious issues at hand. 

And with the seriousness of these issues, I can’t help but notice 

that no one from the Labor Department is testifying today. That 

is too bad. 

Mr. Chairman, I respectfully submit that, in addition to the expert testimony we will hear from the GAO, it would have been 

helpful to have a representative from the department here with us 
5

today. A Labor Department expert could have brought a different 

perspective to the problems of so-called wage theft. 

We have been told that a lack of political appointees within the 

administration precludes the Department of Labor from testifying 

today. I certainly appreciate the fact that the department—indeed, 

the entire administration—is still in transition. However, that does 

not explain why career civil servants at the department, many of 

whom have spent decades enforcing these laws, could not have testified today and offered their thoughts. 

At a minimum, one of these long-term officials with responsibility for enforcement of our wage and hour laws might have offered an explanation for dereliction of duty, alleged by the GAO. 

More importantly, that expert could have offered possible solutions 

to the problem. 

At our urging, I understand that the majority requested that a 

Department of Labor official testify here today. I am told the department declined. 

I am not sure how persistent we were in pressing the department 

on this point, Mr. Chairman, but personally I don’t think we should 

have taken ‘‘no’’ for an answer. If we are serious about enforcing 

the law and not just scoring political points, we should insist on 

bringing the individuals who are responsible for investigating wage 

and hour violations here to account for their actions. 

That said, the GAO has done extensive work in this area. I am 

sure there are things we can learn from this investigation, and I 

welcome Mr. Kutz of the GAO—back to the Committee once again. 

Thank you, Chairman Miller. I yield back. 

[The statement of Mr. McKeon follows:]

Prepared Statement of Hon. Howard P. ‘‘Buck’’ McKeon, Senior Republican 

Member, Committee on Education and Labor 

Thank you, Chairman Miller and good morning. 

Today’s hearing is about work and pay. It’s the engine that drives the American 

Dream. 

Republicans have long believed in the value and dignity of work, and the rewards 

that come from it. 

Take welfare reform. Back in the 1990s, Republicans pushed to change a system 

that—for decades—gave money to people for not working. 

Today, welfare recipients earn their benefits by working. Or training for a new 

job. Or taking classes to get the skills they need to join the workforce later. 

They are no longer dependent on the government. Instead, government becomes 

dependent on them as recipients eventually earn a living on their own and pay 

taxes. 

And, many years later, I’m happy to report that bipartisan welfare reform is still 

working. From 1996 to 2006, The Heritage Foundation says the number of people 

receiving welfare dropped by nearly 60 percent. 

For these and all American workers, we have a duty to ensure that federal workplace laws are enforced. And that brings us to the subject of today’s hearing—‘‘wage 

theft.’’

Mr. Chairman, I’m not sure this is the best language to discuss the whole range 

of issues that need our attention in this area. The allegations we’re examining are 

not always ‘‘theft’’ as we know it. 

The U.S. Department of Labor’s Wage and Hour Division is responsible for enforcing a whole host of workplace laws. 

For instance, we’ll hear today about alleged violations of child labor laws. This 

isn’t a question of so-called ‘‘wage theft.’’ But it’s an equally important concern. 

Rather than using politically-charged language, I think we should ease the rhetoric and focus on the serious issues at hand. 

And with the seriousness of these issues, I can’t help but notice that no one from 

the Labor Department is testifying today. 
6

That’s too bad. 

Mr. Chairman, I respectfully submit that—in addition to the expert testimony we 

will hear from the GAO—it would have been helpful to have someone from the department here with us today. 

A Labor Department expert could have brought a different perspective to the 

problems of so-called ‘‘wage theft.’’

We have been told that a lack of political appointees within the Administration 

precludes the Department of Labor from testifying today. I certainly appreciate the 

fact that the Department—indeed, the entire Administration—is still in transition. 

However, that does not explain why career civil servants at the Department—many 

of whom have spent decades enforcing these laws—could not have testified today 

and offered their thoughts. 

At a minimum, one of these long-time officials with responsibility for enforcement 

of our wage-and-hour laws might have offered an explanation for dereliction of duty 

alleged by the GAO. 

More importantly, that expert could have offered possible solutions to this problem. 

At our urging, I understand that the majority requested that a Department of 

Labor official testify here today. I’m told the Department declined. I’m not sure how 

persistent we were in pressing the Department on this point, Mr. Chairman. But 

personally, I don’t think we should have taken ‘‘no’’ for an answer. 

If we’re serious about enforcing the law—and not just scoring political points—

we should insist on bringing the individuals who are responsible for investigating 

wage-and-hour violations here to account for their actions. 

That said, the GAO has done extensive work in this area. I’m sure there are 

things we can learn from its investigation, and I welcome Mr. Kutz of the GAO back 

to the Committee once again. 

Thank you, Chairman Miller. I yield back. 

Chairman MILLER. Thank you. 

The chair would just respond that it is—as it has been since I 

have become chair of the Committee, the GAO will testify on its 

findings and we will ask the Department of Labor, and we will be 

asking the Department of Labor, the new Department of Labor, 

what they will be doing and their recommendations to follow up on 

this, because I think, at the end of the day, we are going to see 

that the laws are inadequate and fail to protect the very people 

whose wages are being stolen. 

I do not think that wage theft is a too severe term. A conscious 

decision, as you will see in the record, has been made to deny these 

people the wages that they are entitled to under the law. 

You are stealing—it may only be a dollar an hour or a few dollars an hour, but what you will see is it adds up to very serious 

money for thousands and millions of workers in this country who 

do not get the benefit of the wages that they signed up to earn for 

the work that they, in fact, do. 

There are not a lot of allegations that these people didn’t do the 

job. They did the job. They weren’t paid at the conclusion of the 

job on either the legal rate or the agreed rate by their employer. 

And so we have a long ways to go here yet. 

Mr. MCKEON. Mr. Chairman, may I respond? 

Chairman MILLER. Sure. 

Mr. MCKEON. I agree with you totally. That is why I say that 

we should have someone here from the Department of Labor because——

Chairman MILLER. With all due respect——

Mr. MCKEON [continuing]. They should be held to account for 

that. 
7

Chairman MILLER. With all due respect, we had people here from 

the Department of Labor before, and it was fairly pathetic, in 

terms of their inability to provide the data. So we will give the new 

Department a chance to get up and running. We expect them to 

come and to respond to this and to help us develop a solution to 

it. 

Mr. MCKEON. Again, Mr. Chairman—and this will be my final 

comment on this—there will be a few people at the top of the Department replaced, but there are many people there that have been 

there for a number of years that have the responsibility for enforcing these laws. I would like to know why they haven’t been. 

Chairman MILLER. And I think it is——

Mr. MCKEON. If it is because of their top leadership, then that 

should be brought out——

Chairman MILLER. I think as we will see, they utterly failed in 

that obligation. 

Dr. PRICE. Mr. Chairman, if I may? May I ask a question of the 

chairman? 

Chairman MILLER. Yes. 

Dr. PRICE. And I apologize for being a bit late, but are we going 

to—is this Committee going to have the Department come in and 

respond to this report at any point? Is that——

Chairman MILLER. That is my intention. When we start to consider legislation, we will want their response as to what happened 

here and what we need to do and what we should do going forward. 

Dr. PRICE. In hearing format? 

Chairman MILLER. I would expect so, yes. 

Dr. PRICE. Thank you. 

Chairman MILLER. Mr. Kutz, welcome to the Committee. Let me 

just introduce Mr. Kutz to the Committee once again. He needs no 

introduction for the members, but certainly for the audience. 

Gregory Kutz is currently the managing director of GAO’s Forensic Audits and Special Investigations Unit. Mr. Kutz has testified 

and been responsible for investigative reports about the Federal 

Government’s handling of Hurricane Katrina and Rita, security at 

airports and borders, and security of radioactive materials, among 

other important issues. 

Mr. Kutz has testified before the Committee several times, including last Congress, when he testified about abuses in the teen 

residential treatment industry. 

Mr. Kutz is accompanied by Jonathan Meyer, who is the assistant director of GAO’s Forensic Audits and Special Investigations 

Unit. 

Mr. Kutz, welcome to the Committee, and we look forward to the 

testimony. You know the rules. We will give you 5 minutes here 

to try to summarize your report and then open it up for—10 minutes, excuse me, 10 minutes for you to summarize your report and 

then open it up for questions. Thank you. 
8

STATEMENT OF GREG KUTZ, MANAGING DIRECTOR, U.S. GOVERNMENT ACCOUNTABILITY OFFICE, WASHINGTON, DC; ACCOMPANIED BY JONATHAN MEYER, ASSISTANT DIRECTOR, 

U.S. GOVERNMENT ACCOUNTABILITY OFFICE, DALLAS, TX 

Mr. KUTZ. Mr. Chairman and members of the Committee, thank 

you for the opportunity to discuss the Department of Labor’s investigations of wage and hour complaints. 

Last July, I testified before this Committee that 15 cases of wage 

theft were not adequately investigated. Today’s testimony highlights the results of our investigation into whether those 15 cases 

were isolated or the tip of the iceberg. 

My testimony has two parts. First, I will discuss the results of 

our investigation. And, second, I will discuss our recommendations 

and conclusions. 

First, our covert testing clearly shows that the complaint intake 

process is fundamentally flawed. Posing as fictitious wage theft victims, we filed 10 common complaints with Labor offices across the 

country. We also posed as a fictitious employer that had committed 

the labor law violations. 

Examples of our findings include: no response to a message we 

left that children were working during school hours and operating 

circular saws and meat grinders; one fictitious employee being told 

not to file a complaint unless he had another job lined up; investigators accepting employer refusals to pay without question; and 

cases recorded in the system as paid, even after our bogus employee told the Department that they were not. 

We also found that most calls we made during business hours 

went directly into voicemail and oftentimes were never returned. 

At the end of my presentation, I will play several clips from the 

undercover calls we made to Labor offices across the country. 

We also investigated cases involving over 1,000 actual wage theft 

victims. These cases were identified through data-mining, and thus 

they cannot be projected to all investigations. However, they clearly 

show that many investigations are not adequate. 

For example, one employer agreed that it owed 93 employees 

$200,000. However, this employer stalled until the 2-year statute 

of limitations had expired. This case was closed with no collections. 

In another case, an investigator found that 438 employees were 

owed $230,000. This case was not assigned for 22 months and, once 

again, ultimately was closed with no collections. 

One allegation was from an employee that worked at a sheriff’s 

office. The investigator closed this case after two phone calls were 

not returned. 

We also found that conciliation cases are oftentimes not recorded 

in the Department of Labor’s systems. Conciliations generally reflect complaints of one or several employees. We found that the 

head of the southeast region, which has about 57 percent of these 

types of complaints, instructed offices in that region not to record 

failed attempts at conciliation. 

Thus, it is not surprising that our statistical sample showed that 

95 percent of recorded conciliations were adequately investigated. 

This is a good news-bad news story. The good news is that, when 

adequate investigations are performed, there are often positive re-
9

sults. The bad news is that likely thousands of these failed conciliation cases are never recorded in the system. 

Non-conciliation cases generally involve a larger number of employees. Our statistical sampling of these cases showed that 81 percent of the time they were adequately investigated. For example, 

in one case, it was completed in 4 months with $59,000 collected 

for 12 convenience store employees. This case involved detailed 

payroll analysis and complete follow-up to ensure that all of the 

employees were, in fact, paid. 

The flip side to this is that 19 percent of the larger cases are not 

adequately investigated. This leaves thousands of victims vulnerable to wage theft with no help from the Federal Government. 

Moving on to my second point, based on our overall work, we 

have concluded that the complaint intake and investigation processes are not effective. We plan to issue a report with several recommendations to Labor to improve their human capital, processes, 

and the use of technology. 

For example, we were surprised to find that investigators had no 

special technology or tools to do their work. If Labor’s mission in 

this area is to properly investigate wage theft allegations, then 

they need specialized tools to research and identify individuals and 

businesses. My unit would be far less effective in serving the Congress without the critical research tools that we use every day. 

In addition, throughout our work, we found many symptoms of 

human capital problems. We will be recommending for Labor to 

take a look at matters such as hiring, training, and whether sufficient staff are on board to achieve the mission. 

In conclusion, our work shows that the 15 cases I described for 

you last year were, in fact, the tip of the iceberg. I am concerned 

that thousands of victims of wage theft become frustrated with the 

complaint intake process and never actually file complaints with 

Labor. 

Thousands of others who file complaints find themselves victims 

of unscrupulous employers who know how to beat the system. 

I am also concerned that, with the current economic crisis, that 

wage theft is increasing. Congress and the new administration 

have an opportunity to make changes that would better protect our 

nation’s most vulnerable workers. 

Mr. Chairman, as I mentioned, I would like to now play some 

clips from the undercover calls we made that will give you and the 

members of this Committee an inside look at what real victims of 

wage theft can face when dealing with the Federal Government. 

[Begin audio clip.] 

VOICE. Okay, well, you will have to pay him at least the minimum wage for all the hours that he worked. 

VOICE. Well, you know, like I said, all of our contracts have dried 

up. We really don’t have anything coming in, so——

VOICE. Okay, so you are not in a position where you can pay 

him? 

VOICE. No. 

VOICE. Okay, well, then I will let him know that he has his private right to action to pursue the funds. 

[End audio clip.] 

[Begin audio clip]. 
10

VOICE. Once the employer tells me that they are not going to pay 

and that they can’t, my ability to, you know, force payment has 

ended. 

VOICE. So you really have no power to do any—all you did was 

just call her and ask her to pay me. I mean, she is just——

VOICE. And, well, the thing is that—I explained the law to her. 

She knows that she needs to pay you. It is just that she is saying 

she doesn’t have the money to. I can’t wring blood from a stone. 

I am bound by the laws that I am able to enforce, the money that 

Congress gives us and all of that lovely stuff. If you are having a 

problem with what our office is capable of achieving based on the 

laws that were written, then you need to write your congressman. 

Okay, do you know who your congressmen are? I mean, we can use 

all the help we can get. 

[End audio clip.] 

[Begin audio clip.] 

VOICE. You are sure you don’t want to just have a nice conversation with him yourself? 

VOICE. No, no, I don’t want to, because he gets very loud and 

angry. 

VOICE. Okay, well, here is another avenue that you can pursue. 

Okay, do you have another job lined up? 

VOICE. No. 

VOICE. Okay. You might want to do that before you file a complaint with us, because I can’t guarantee that he is not going to fire 

you. 

[End audio clip.] 

[Begin audio clip.] 

VOICE. Yeah, they have to have a certain ADV amount for us to 

have enterprise coverage, and we don’t have it. 

VOICE. What does that mean? I don’t understand. 

VOICE. What the gross sales is for that year. 

VOICE. How do you get that? 

VOICE. We report off of the IRS statements. 

VOICE. Oh. So you check with IRS and IRS says that he reports 

less than that? 

VOICE. Yes. 

[End audio clip.] 

[Begin audio clip.] 

VOICE. We have a backlog right now of about like 8 months, 8 

to 10 months. 

VOICE. Okay. 

VOICE. And we are not even going to be starting an investigation 

until 8 to 10 months. 

[End audio clip.] 

[Begin audio clip.] 

VOICE. Please leave a message and the officer of the day will return your call as soon as possible. 

VOICE. I have seen a place—I think it is called CP&D Meat Packaging or something like that in Modesto, California. I have seen 

kids working there; I believe they are under age. They seem to be 

working all day, probably during school. They are working on some 

heavy type of equipment like, I guess you call them circular saws 

and the ones—the machine that makes like hamburger meat. 
11

[End audio clip.] 

Mr. KUTZ. Mr. Chairman, that ends our statement. Mr. Meyer 

and I look forward to your questions. 

[The joint statement of Mr. Kutz and Mr. Meyer follows:]
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Chairman MILLER. Thank you very much. 

When you look at the 10 cases and the other cases, I mean, you 

really see an array of just failures and, in some cases, construction 

of misinformation and misleading and wrong information to the individuals. 

I mean, you have these incredible delays, which are obviously—

the delay is very—it appears to turn out to be costly to the employee, because the statute of limitations has already started running. So if the Department uses up 5, 6, 7, 8 months before they 

even investigate or they just drag the investigation along, the employee all of a sudden loses their right to go to court. 

Is that correct? 
46

Mr. KUTZ. That is correct, yes. 

Chairman MILLER. So then you have other situations where they 

just—they don’t record the complaints at all, so the Department is 

never on the hook for whether they have successfully completed the 

investigation and gotten money for the person or resolved the case. 

That is not part of the database. 

Mr. KUTZ. Yes, 5 of the 10 cases that we did the undercover calls 

were not recorded in the Labor Department’s system. 

Chairman MILLER. And you also have—we heard on the tapes 

here where you have employees basically just saying, ‘‘We asked 

the employer to pay you. They said they are not going to pay. We 

are done.’’

Mr. KUTZ. Correct. That is something we have seen frequently, 

not just this time, but the 15 cases from last year, also. 

Chairman MILLER. You know, it is really quite stunning. But 

then, on top of that, I think it was the last tape that we heard, you 

heard an employee—the employee of the Wage and Hour Division 

basically make up a scenario that never occurred, about going to 

the IRS and not having the wage—so you have an employee openly 

lying, constructing a lie to the person whose wages have been illegally taken, been stolen from them. 

This government employee is lying to them about why they will 

not pursue the investigation, because they went to a non-existent 

database on a non-existent case and came back and said, ‘‘We can’t 

help you.’’ Is that correct? 

Mr. KUTZ. That is correct. And we have referred that individual 

to the inspector general of the Department of Labor for potential 

administrative——

Chairman MILLER. So there is some level of malfeasance here. 

When you start lying to the public about the law that some action 

can be taken, you referred that to where? 

Mr. KUTZ. The Department of Labor inspector general. 

Chairman MILLER. The inspector general of the Department of 

Labor? 

Mr. KUTZ. Correct. And the Department of Labor was concerned. 

We talked to the Department of Labor, people in charge of this division. They were very concerned about employees lying to citizens 

who call into the hotline. 

Chairman MILLER. I would hope that they would be, when we 

have got to at least start with some base of obligation here, in 

terms of doing the job on behalf of the public. 

Well, I am encouraged that you have made that referral. Hopefully, that will help other employees think about what their obligation is. 

But even the act of simply saying, ‘‘We asked the employer. The 

employer told us no,’’ and that that is the end of the case, the employees could do that themselves, and they probably already have 

been told no by the employers. 

So, I mean, what they are looking for is additional resources and 

help when they come to the government, are they not? 

Mr. KUTZ. Yes. I mean, when I was talking about symptoms of 

human capital problems, the discouraging of people from filing 

complaints would seem to be a symptom that there are either not 
47

enough people to answer the phones, not enough people to follow 

up investigations, or something along those lines. 

And, certainly, they are making decisions that the small conciliation cases I mentioned, which are one or several employees, are low 

priority, and that makes sense, compared to the bigger cases, but 

they have got to—they have to be honest with people and say, ‘‘We 

just don’t have time to get to you.’’

And, again, you did see the one case there where they said, ‘‘We 

have got an 8-to 10-month backlog. We won’t get to your case for 

8 to 10 months.’’ And as you said, the clock ticks on those cases, 

so that doesn’t necessarily help the employee. 

Chairman MILLER. You know, you have—I guess there is a problem here. You know, in one of the cases, not in your undercover 

case, but in the other one—I think it is number two—you know, 

it is $800 in back wages. That is a small case, perhaps, for the Department of Labor. To a worker and to a family, that week or that 

2-week pay period, whatever it is, that is a significant chunk of 

money. 

And that is important to them. And to just be told that the answer is no, that is a loss of $800 to that individual. I mean, that 

is——

Mr. KUTZ. Yes, I mean, that is——

Chairman MILLER. I don’t know what the threshold is. Did you 

find any formal threshold at which point you did not proceed, the 

Department of Wage and Hour did not proceed to recover wages? 

Mr. KUTZ. We have asked that question at two levels. Number 

one, from an investigation standpoint, is there a threshold where 

you will actually do an investigation? And it is unclear what that 

is. 

And number two is, when you have a legitimate case, we have 

seen cases with tens or hundreds of thousands of dollars. Sometimes they are litigated by the solicitor’s office; sometimes they are 

not. 

I mean, certainly their criteria is large, we believe, but why some 

large or semi-large and other semi-large aren’t, why some are and 

some aren’t, we are not completely clear, and it is not documented 

exactly what that criteria would be. 

So it is two levels. I mean, sometimes they are not actually supporting the investigators by taking it over the goal line and going 

to court with the unscrupulous employers in those cases. 

Chairman MILLER. You know, you have cases—you have $66,000 

for 21 employees, where basically—I think it is case number nine, 

the ambulance company. The Wage and Hour Division essentially 

walked away from that case. They just said, well, it has taken too 

long. 

You know, $47,000 in overtime to 98 employees, again, they cited 

some evidence as a reason for not having the employer pay. The 

evidence turned out to be essentially fictitious. It did not exist. 

A hundred and fifty thousands dollars due 191 employees, the 

employer said that he would have to file bankruptcy. They took 

that as acceptable, did nothing more on behalf of that person. Well, 

I guess they negotiated it down——

Mr. KUTZ. At that point——
48

Chairman MILLER [continuing]. But the person never filed bankruptcy. 

Mr. KUTZ. Right. They compromised on that. 

Chairman MILLER. They compromised on that. You have 241 employees that were owed nearly $2 million in overtime, and Wage 

and Hour rejected the employee’s offer to pay $50,000 in back 

wages and then eventually sent letters saying, ‘‘This employer is 

not going to pay. You are on your own.’’

Mr. MEYER. Correct. 

Mr. KUTZ. Correct. Yes. 

Chairman MILLER. So, again, we don’t know that—here you have 

$2 million, and you have an $800 theft of a paycheck. There is apparently no threshold within the Department. 

Mr. KUTZ. No, only they define that conciliations are small and 

non-conciliations are large. But even within those, they are pursued with different levels of enforcement and aggressiveness with 

respect to calls, site visits, or whatever other types of things. 

And as you mentioned, the bankruptcy thing is interesting. 

There are several cases where they closed the case because they 

said the company was bankrupt. We checked our databases: They 

are not bankrupt. 

I mean, and it gets into those tools I mentioned. Do they have 

the right tools to do investigations? There are tools out there where 

you could check things like bankruptcy fairly readily. 

Chairman MILLER. But they just don’t go through that forensic 

process? 

Mr. KUTZ. I don’t believe they have—I don’t believe they have 

the tools in that particular to use. That is what I understand. Is 

that correct? 

Mr. MEYER. That is correct. They don’t have access to public 

court records. That is just not part of their processes. 

Chairman MILLER. Did you see any change from when you testified in Congress to the end of the year? I mean, did you—when you 

were doing this investigation, did you see any change from your 

initial determinations? Was there any response to the initial GAO 

report? 

Mr. MEYER. I can speak to that. Initially, from our testimony last 

year, there was some level of disbelief. But in our closing conferences on this report and the—especially the statistical sample 

testing, the Wage and Hour officials in Washington have seen the 

problems that are there and really seem concerned about what we 

found and are looking to find ways to improve. 

Mr. KUTZ. Well, Mr. Chairman, I would say, too, that we now 

know that there are many cases that are properly investigated and 

collected. And so the real issue is: Why are 81 percent of the big 

cases done effectively and 19 percent not? 

The good news is, 81 percent there is an effective investigation, 

but 19 percent represents tens or hundreds of thousands of people 

over time. That is pretty significant. And so why there are those 

differences like that, that to me is too high of a rate of unsuccessful 

investigations. 

Chairman MILLER. Just one last question, and then I will turn 

to my colleagues. Is there a regional difference? Is it a regional explanation? Is it——
49

Mr. MEYER. I would say that, in certain regions of the country, 

whether there is a strong state labor enforcement state officials 

that enforce labor laws makes a difference in how effective the 

Wage and Hour Division is because of the assistance they receive 

from the state. 

Chairman MILLER. So if the state is running a strong operation, 

it is more likely you will have stronger enforcement at the federal 

level? 

Mr. MEYER. I think it allows the resources at the Wage and Hour 

Division to handle some of the bigger cases, some of the more problematic instances, instead of a lot of these smaller individual cases 

for one person. 

Chairman MILLER. I see. Thank you very much. 

Thank you, Mr. Kutz. 

Mr. MCKEON. Thank you, Mr. Chairman. 

I am still in a little bit of a quandary of what we are doing here. 

We can beat up on the Department of Labor, but we don’t have 

them to really hear—I mean, there is—what you are talking about, 

the 19 percent, it sounds to me it is pretty indefensible, but I would 

like to see somebody here and to hear what they have to say about 

it. 

When I was in school, 80 percent was a B. The 19 percent probably should get an F. But why this is happening, I would really 

like to know. 

Can you tell me, Mr. Kutz, how many people work at the Department of Labor? 

Mr. KUTZ. No, I don’t know. We know within Wage and Hour 

there are over 700 investigators and a little over 1,000 staff. We 

focused on the Wage and Hour Division. I am not familiar with the 

whole Department of Labor. 

Mr. MCKEON. Seven hundred investigators and 1,000 staff. So 

1,700 people work in the Wage and Hour——

Mr. KUTZ. No, that is total. The total is 1,000. There are several 

hundred technicians and other administrative—that is 700-some 

investigators. 

Mr. MCKEON. A thousand people? 

Mr. KUTZ. Roughly. 

Mr. MCKEON. To investigate how many complaints, would you 

estimate, in a year? 

Mr. KUTZ. Well, in the system in 2007, there were a little over 

30,000 recorded. But as I mentioned, a lot of cases never get recorded in the system, so it is probably 30,000 plus several thousand 

more, at least. Let’s say 40,000. 

Mr. MCKEON. So at least 30,000? 

Mr. KUTZ. At least 30,000, yes. 

Mr. MCKEON. And we have got 1,000 people to investigate 30,000 

and they are doing a good job on 81 percent of them and a lousy 

job on 19 percent of them. 

Mr. KUTZ. Of the bigger cases, correct. 

Mr. MCKEON. You know, maybe we are just holding this hearing 

to beat up on the Bush administration. I don’t know. But out of——

Chairman MILLER. If I were one of the 20 percent, I think you 

would want to know what happened to my wages. 
50

Mr. MCKEON. No question. That is why I would like to see somebody from Department of Labor that we could zero in on. I didn’t 

disturb you, Mr. Chairman. I appreciate it. Thank you. 

Mr. Kutz, you have testified as to the failures of frontline rankand-file federal employees at the Department of Labor in handling 

and processing wage and hour complaints. There is nothing in your 

testimony to suggest that these shortcomings were the result of 

any directive by any political appointee of the prior administration, 

is there? 

Mr. KUTZ. Nothing that we saw of that, no. 

Mr. MCKEON. You are not suggesting that these career federal 

employees were told by Washington to mishandle or delay processing complaints, are you? 

Mr. KUTZ. We have no evidence of that, no. 

Mr. MCKEON. Again, that is why I wonder why we are going 

through this. 

You have testified at length about your findings at this most recent analysis of case handling. By way of comparison, do you have 

any similar analysis of enforcement under prior administrations? 

Mr. KUTZ. I believe the other GAO report went back into the 

1990s and showed declining numbers of investigators of about 20 

percent, but I don’t know if we have got any program reviews in 

the 1990s that I am aware of. 

Mr. MCKEON. Possibly if we increased the number of investigators, you say this started decreasing back in the 1990s? 

Mr. KUTZ. It started decreasing from 1997 to 2007. It reduced by 

about 25 percent the number of investigators in this division. So 

over a 10-year period, it went down by 20 percent to 25 percent. 

Mr. MCKEON. That may be one of the solutions that we could attack to help the other 20 percent or 19 percent. 

Has your study revealed any evidence to suggest that frontline, 

rank-and-file government workers were handling cases differently 

during the Clinton administration? 

Mr. KUTZ. We don’t know that, can’t comment on that. 

Mr. MCKEON. Or the Bush administration before that or the 

Reagan administration before that? 

Mr. KUTZ. No, no. We just know for the last 2 or 3 years. That 

is the timeframe we have looked at. 

Mr. MCKEON. Okay, so I—Mr. Chairman, I think that this is a 

really important issue. If we have 19 percent of people who have 

serious complaints—it sounds to me like we do—we ought to really 

bring the Department of Labor in here, ask them why this is happening, ask them if they think that, by adding additional people 

into the Wage and Hour investigation process would help solve 

this, then we should do something about changing the budgetary 

requests or the budgetary requirements or something within the 

Department. 

You know, I don’t think we disagree that people should be paid 

for their work. You know, I think we are all in agreement on that. 

If this is just a political witch hunt to try to blame the Bush administration, that is one thing. If it is to really solve the problem, 

then we should have people here from the Department, we should 

get to the bottom of it. 
51

I personally think, aside from hearing—you know, I mean, this 

is pretty bad stuff, what you have shown here—that if we have 

people at the Department, career people that are giving these kind 

of responses to people that are making serious requests, that 

should be handled. 

And it sounds like you are not blaming it on the administration 

giving false direction. They are telling them to do certain things a 

certain way. Of the 15 people that you called, were you able to nail 

down to like a couple of employees that were making the same mistakes over and over or giving these kind of——

Mr. KUTZ. In the Baltimore office, there was one individual that 

answered the phone several times. There is usually one or two people answering the phone, and so we did six different offices. 

I will tell you the office that we did work: Baltimore, Birmingham, Dallas, Miami, San Jose, and West Covina, California. 

Those were the six offices we called. 

So you typically would get the same person if you made multiple 

calls to an office. But Baltimore——

Mr. MCKEON. Then——

Mr. KUTZ [continuing]. Several of the ones you heard on the 

audio earlier were the same person in Baltimore, some of the more 

egregious cases. 

Mr. MCKEON. Then I think we could seriously nail down some 

of this stuff and fix it. And that is what we should be doing. 

Mr. KUTZ. And we agree, too. The Department of Labor asked us 

for the information so they know who those employees are and they 

can do training, counseling, administrative actions, whatever the 

case may be. So we will share with them that information. 

Mr. MCKEON. And maybe they have made progress in that we 

don’t know about. And that is why, again, we should have somebody here from the Department to find out. 

I think we understand that most of these are career appointees—

I mean, not appointees. They are career people that have applied 

for jobs, that have taken jobs, that are doing the jobs, and maybe 

out of the 1,000 people, maybe 990 are doing a good job or maybe 

900 are doing a good job or maybe 10 are doing a terrible job or 

100 are doing a terrible job. 

But at some point, we should get serious about really fixing the 

problem instead of trying to point political blame. That is my point 

in this whole thing, Mr. Chairman. 

Chairman MILLER. Thank you. The chair will recognize himself. 

You want to keep talking about political blame. Let’s just understand something: I became chairman of this Committee 2 years 

ago. I don’t remember any oversight on this problem prior to my 

becoming chair. 

We asked a question of GAO because this issue has been raised. 

It was raised many, many years throughout the construction 

trades, throughout all kinds of occupations. We could get no responses. 

We asked GAO. They investigated the time and period. They 

couldn’t go back and investigate what—you know, we weren’t 

there, they weren’t there, and this is what we found. 

When we saw the first report, we said, ‘‘You know, this is a serious problem. Would you go in-depth and find out, was your first 
52

report, you know, an anomaly or is there something systematically 

wrong with this? Is this a systemic problem?’’

They have come back now with this report that says it is much 

more widespread, and it is about 20 percent—19 percent, 20 percent of the cases. It is serious. It is costing people a lot of money. 

They are not following through. We will then take the next step. 

So, you know, it falls on whatever watch you want. This isn’t 

about the politics of that. I became chairman, and I asked this 

question, because I have—you know, the issues of people being 

paid off the books, people being denied overtime, this is not new. 

It may be new to you and to this Congress because there was no 

concern expressed about this over the last many years. And so here 

it is, and we will have the Department of Labor in. We expect them 

to partner with us to work out the solutions to this problem and 

get these people the wages that they are due. 

Many of these people will never see their wages because there 

was a lack of oversight, there wasn’t due diligence on this issue. 

We would hope that people now and the Department, recognizing 

the problem they have there, will change. And I think it will under 

the new secretary and new people. Why would you carry on in this 

inherited problem? 

But the purpose of here is to get the change on behalf of working 

people that every day are losing wages that are entitled to them. 

So we will go through this process, and everybody will be included, 

and everybody will have a chance to participate. 

Mr. MCKEON. Mr. Chairman, may I respond? 

Chairman MILLER. Sure. 

Mr. MCKEON. You became chairman a little over 2 years ago. I 

was chairman a little less than a year. At the time, we were very, 

very busy, as you remember, finishing up conference on the pension 

bill, passing the mining safety law——

Chairman MILLER. No, I am not saying you weren’t doing your 

job. 

Mr. MCKEON. I understand. 

Chairman MILLER. I am just saying, but, you know, you asked 

a question of GAO and they come back to you. But you know what? 

You don’t have to use your staff. God bless the fact that we have 

got GAO. They went off and did the work. They came back with 

the results. We were fairly busy, too, if I remember. So——

Mr. MCKEON. Yes, we are all——

Chairman MILLER. You know, this is just a question of whether 

or not this is a priority. 

Mr. MCKEON. We are all real busy here. 

Chairman MILLER. This happens to be a priority for me——

Mr. MCKEON. What I would——

Chairman MILLER [continuing]. I hope for the Committee, and I 

hope for the Department of Labor. 

Mr. MCKEON. Now may I respond? 

Chairman MILLER. Sure. 

Mr. MCKEON. And I will respond, and I will not interrupt you 

when you respond. 

Chairman MILLER. Just having a conversation. 

Mr. MCKEON. That is great. What I would like to say is, I am 

totally in agreement with you that this should be fixed. 
53

Chairman MILLER. I knew we would get there. Excuse me. I am 

sorry. 

Mr. MCKEON. We get along well personally. I will try to maintain 

the decorum of not interrupting you again. 

Chairman MILLER. And I am going to try really hard, too. 

Mr. MCKEON. That would be great, Mr. Chairman. Now, I think 

we are in agreement that there is a problem with this 19 percent. 

I think we are in agreement of how we should fix it. I am not concerned about blaming you because you have just been chairman for 

2 years, and I was just chairman for a year. 

I think the important thing is, they have not been able to tell us 

that this didn’t happen under FDR, you know, or under Truman. 

What we—the important thing is that it is 19 percent of people 

that need to be helped. And there is a way to address that. And 

I think that it is important that we do that and it is incumbent 

upon us to do that. 

And I will work with you to make sure that that happens. I just 

want to make sure that we are not trying to play a game of political blame, that we are really trying to help the 19 percent. And 

I think that there is a way to do it. We are going to have to get 

the Department in here and in a non-finger-pointing way go after 

those employees that are not doing their job. 

They are hired. They are paid. And then, once we find out that 

all 1,000 of them are doing their job adequately, if they still can’t 

get to the 19 percent, then they should hire more people, and they 

should be adequately trained, and they should understand the importance of their job is to uphold and carry out the law so that people are paid for an honest day’s wages for an honest day’s work. 

Thank you, Mr. Chairman. 

Chairman MILLER. Thank you, Mr. McKeon. 

Mr. Kildee? 

Mr. KILDEE. Thank you, Mr. Chairman. 

Mr. Kutz, you said that the complaint input system is fundamentally flawed. Does it need restructuring or just adherence to the 

present rules and regulations? 

Mr. KUTZ. I think it is a combination of improved customer service. You heard the audio here and the way that people were treated 

sometimes. I think it is a matter of tone and the way you treat people with respect. 

And it is also a matter of competence, with making sure that all 

the cases are recorded in the system. I mentioned cases aren’t recorded in the system. So, for example, if you have a repeat employer that is making all kinds of—having all kinds of issues and 

you don’t record cases in the system, how can you go back and 

make sure, when a new complaint comes in, that that employer 

hasn’t done several other wage theft or other types of violations? 

And so it is a combination of customer service, competence, and 

enforcement at that front intake process. And to me, if you don’t 

do a good job at the front of the process, you don’t even get to the 

19 percent necessarily, because some people will probably walk 

away and not even file a complaint. 

Mr. KILDEE. Is there someone within the Department or agency 

within the Department, not GAO, but that is in charge of quality 

control? 
54

Mr. MEYER. I think there are individuals in Washington that try 

to do studies and monitor that situation, but, again, because complaints aren’t recorded into the system at all, it is difficult to go 

back and check to see if a good job was done if there is no record 

of that call ever coming in. 

Mr. KILDEE. I know very often if you call a company or an agency, sometimes you will hear, ‘‘Your call may be recorded for quality 

control.’’ That is commonly done in the private sector. 

Mr. KUTZ. The IRS does that, too. 

Mr. KILDEE. IRS does that. 

Mr. KUTZ. I have listened to the call centers in the IRS, and 

other federal agencies, I believe, do that to monitor the quality of 

the responses people make. And sometimes the calls are not 

known. You are actually monitoring someone; they don’t know you 

are monitoring them, where you are listening for Q.C. purposes. 

Mr. KILDEE. I always admit, I have kind of mixed feelings on 

that third-party listening, but at least they are concerned about—

the purpose is for quality control. And I don’t see a real concern 

for quality control. 

Every investigator should be impartial. This person calling in, 

the person is in a sense a judge and a solver of this. But many of 

them seem to be on the side of the employer or have just worn out 

in the job and don’t care. They come to work in the morning, and 

they go home and don’t feel like kind of, ‘‘I have done some justice 

today.’’

You know, if I were talking to one of them, I would say, you 

know, the laborer is worthy of his hirer. And each one of those investigators—how often and how regularly—or are they at all—is 

their investigative prowess evaluated? 

Mr. KUTZ. I am not aware of any internal reviews necessarily, 

other internal reviews. 

Mr. MEYER. I think that each investigator has internal metrics 

based on back wages that they collect, the time it takes them to 

enforce a case. But as far as success rates and how effective they 

are, that is not part of the metrics, as far as we know. 

Mr. KILDEE. So a person could get into a position where they 

could just show up? 

Mr. KUTZ. Yes, I mean. I would caution the Committee, too, to 

say just throwing money at this issue is not necessarily going to 

solve the problem. You could have more people, but if they are the 

wrong people without the right tools, you might end up with the 

same result. 

So you have got to look at this from a bigger perspective that you 

need improved people, processes and systems that will then—are 

you hiring the right people? Are you training them correctly? Is 

there proper quality control over the work that they do, et cetera? 

So I would just caution, just throwing FTEs at this and, you 

know, repeating some of the same things that are being done now 

isn’t necessarily going to get you a better result. 

Mr. MEYER. And I would add that I have interviewed multiple 

investigators in the field. And most, if not—I would say many of 

them and pretty much most of them are dedicated and concerned 

about this issue. So I don’t—I think it does get more to your case 

of what you said, where they are worn out. There are a lot of cases 
55

they are having to respond to as rapidly as possible, and there is 

just a lot of work to be done. 

Mr. KUTZ. Well, and that is why technology is important, too. I 

mean, you can leverage your resources better if you have at your 

fingertips the ability to determine whether a company is bankrupt 

or not, where that company is located, what their revenues are. 

They don’t have those tools right now, from what we can see. 

And so if I were to do investigations for the Congress without 

those tools, I couldn’t do the job. I couldn’t be up here talking to 

this Committee and the other committees we work for with the 

kinds of investigative findings we have. You have got to have good 

technology to be an effective enforcement and investigative unit. 

Mr. KILDEE. Now, as far as quality control, we have much smaller operations. I have 18 people working for me, so it is much easier 

to evaluate. But I—every week at our staff meetings, I say, ‘‘When 

someone calls us with a problem, we should not take that as a burden, but as an opportunity.’’

And now that might be self-serving for me, because every 2 years 

I actually get an accounting on my stewardship, right? But if I find 

people on my staff who look upon a call as a burden rather than 

an opportunity, then I don’t want them on my staff. 

And if we could transfer some of that over to the Department of 

Labor, that could be very helpful. 

Mr. KUTZ. Well, I think that is a great point. I mean, the culture 

of—is this a customer of you or someone who you are going to treat 

with—you know, we have a hotline. We get people that call in all 

the time. No matter if they are crazy, we get people that call and 

say, ‘‘I am a paranoid schizophrenic. You know, I have had some 

sort of an experience.’’ But we treat them all the same. 

We don’t record them all as cases, because some of them have 

issues that have nothing to do with GAO or anything that we are 

able to help them with, but we still treat them all the same, no 

matter what. And I think that is an important piece of a culture 

here that needs to be addressed. 

Mr. KILDEE. Thank you, Mr. Kutz. 

Thank you very much, Mr. Chairman. 

Chairman MILLER. Thank you. 

Mr. Price? 

Dr. PRICE. Thank you, Mr. Chairman. 

Some of the—well, I will just comment that all of us believe that 

workers ought to be paid honest wage for an honest day’s work. 

Some of the information that you presented, the one that was most 

disturbing was this meatpacker in Modesto, California, accusing 

child labor laws being violated and young people, young children 

missing school and working on dangerous machines. 

That was fictitious, correct? 

Mr. KUTZ. Correct. 

Dr. PRICE. So it wasn’t true that that was happening? 

Mr. KUTZ. No. But——

Dr. PRICE. The fact that the investigator didn’t follow up on it 

or the DOL employee didn’t follow up on it is the point, right? 

Mr. KUTZ. Yes. 

Dr. PRICE. We don’t want people across this nation going away 

from this hearing thinking that children are working at a 
56

meatpacking plant in Modesto, California, without anybody following up on it. 

Mr. KUTZ. That is correct. 

Dr. PRICE. Okay. 

Mr. KUTZ. It was one of our undercover agents. 

Dr. PRICE. I want to just correct the record. Charlie Norwood, 

who was a member of this Committee and longstanding member of 

this Committee, and passed a couple of years ago, in fact, did a 

similar oversight with the use of GAO at the Department of Labor’s 

offices, workers’ compensation offices, programs and the like, similar issues of incompetency we raised at that time. 

And you would acknowledge that previous work has, in fact, been 

done, would you not? 

Mr. KUTZ. Yes. And I am not familiar with—I am not sure how 

far back that goes. The latest report of GAO, aside from the two 

investigative reports we did, was a GAO report issued at your 

hearing last year in July. 

Dr. PRICE. A couple of your comments that you made, you said 

that this is just the tip of the iceberg, that the complaint intake 

process—investigation process wasn’t adequate. Do you have any 

reason to believe that this type of activity by career civil service 

employees at the Department of Labor is any different than at any 

other Department? 

Mr. KUTZ. No, not necessarily. I mean, we see——

Dr. PRICE. So it could be the same at other Departments? 

Mr. KUTZ. Yes. 

Dr. PRICE. And this—your investigation focused on career rankand-file employees within the Department of Labor, correct? 

Mr. KUTZ. It focused on the 32,000 complaints that were recorded 

by Wage and Hour for fiscal 2007, and it was primarily related to 

that, in addition to the undercover calls we made, which are realtime calls over the last several——

Dr. PRICE. And the folks who respond to those complaints are career rank-and-file employees of the Department of Labor? 

Mr. KUTZ. That is correct. Yes. 

Dr. PRICE. Do you know if any of those folks are members of a 

union? 

Mr. MEYER. That wasn’t a part of our discussion. 

Dr. PRICE. You wouldn’t—they may or may not be. 

Mr. KUTZ. We are not aware of that. 

Mr. MEYER. Right. 

Dr. PRICE. We have heard some comments from some folks on 

the Committee here that these employees were ‘‘lying,’’ seemed that 

they were ‘‘worn-out’’ or didn’t care. Do you know if these would 

be the same level of employees that would be charged with handling, for example, a national health care program? 

Mr. KUTZ. Don’t know. 

Dr. PRICE. No way to know that? 

Mr. KUTZ. No. 

Dr. PRICE. So it is possible that folks who are advocating for 

something like a national health care program that these would be 

the same level of employees that would be answering the phone for 

complaints in that area as well, is that correct? 
57

Mr. MEYER. The level of employees answering the phone ranges 

from, I think, a GS-5 all the way up to GS-12 investigator. 

Dr. PRICE. Could be the same? Could be the same? 

Mr. MEYER. It is a——

Dr. PRICE. So the prospect—it is curious that some of the calls 

that—or some of the recordings that you made or played for us, one 

of the employees gave the information to the individual calling that 

they had a private right of action. They could take their employer 

to court. That was accurate information, correct? 

Mr. KUTZ. Yes, correct. They are oftentimes—when there is a 

backlog or we say, ‘‘We can’t get to your case,’’ you can file a private lawsuit. 

Dr. PRICE. When I call the Federal Government sometimes, I get 

that, too. ‘‘You ought to go somewhere else. You ought to look to 

somebody else. You ought to try some other avenue.’’

So it is wholly likely that folks who would be wanting to set up 

a nationalized pension plan, 401(k) plan run by the Federal Government that the employees who would be responsible for investigating or answering challenges to a plan like that would be the 

same level of employee as these folks, is that correct? 

Mr. KUTZ. If they are between what Mr. Meyer said, GS-5 and12, it is possible. It is just something we don’t have any direct 

knowledge of. 

Dr. PRICE. So the prospect for allowing the Federal Government 

to be more intrusive in other areas of our lives—health care and 

financial security for one’s family—might be under the control of 

folks just like the people, the 19 percent that have, as some others 

have said, were just worn-out? Is that accurate? 

Mr. MEYER. It is possible. 

Mr. KUTZ. It is possible. 

Dr. PRICE. It is possible? 

Mr. MEYER. Sure, it is possible. 

Dr. PRICE. Well, as a physician member of Congress, it concerns 

me greatly that there are members of the House of Representatives 

who are clearly convinced this is exactly where we need to go, to 

have the Federal Government running our entire health care system. 

And consequently, it is instructive to look to other areas that the 

government controls, I believe, for increasing education of both 

members of the House of Representatives, Congress, and the American people as to what that might look like. 

Thank you. I yield back. 

Chairman MILLER. Mrs. McCarthy? 

Mrs. MCCARTHY. Thank you, Mr. Chairman. And thank you 

again for holding this hearing. 

Mr. Kutz, if I remember correctly, July of 2008, we had a hearing 

almost on the same subject. Is that not true? 

Mr. KUTZ. That is correct. 

Mrs. MCCARTHY. And at that hearing, didn’t we have representation from the Department of Labor? 

Mr. KUTZ. Yes. 

Mrs. MCCARTHY. And if I remember correctly, one of the statements that was put from the assistant secretary, Alexander—I am 

going to pronounce his name wrong—Passantino touted his divi-
58

sion’s effectiveness by citing WHD’s own performance statistics and 

rejected everything that you said. 

He also was asked if the Department of Labor was effectively enforcing our wage and hour laws, and he responded with an unqualified, ‘‘Yes.’’ And I guess I want to—with the videos that we saw or 

the voice messages that we saw, those were random calls that you 

made. Were they to the same person all the time? 

Mr. KUTZ. They were to six offices, the ones I mentioned earlier, 

across the country. 

Mrs. MCCARTHY. Across the country? 

Mr. KUTZ. Baltimore, Miami, Dallas, California, yes. 

Mrs. MCCARTHY. Correct. You have done an awful lot of these investigations. With that being said, with the investigation that you 

made and the telephone calls that your Department made and the 

tapes that you heard, would you say this was probably a fairly 

large amount of people giving answers that were quite not true? 

Mr. KUTZ. It is highly likely there are many others doing the 

same thing. You know, the one thing that we can do for committees 

like yours is give you an inside look at what a real person faces 

when they approach the government, because if we had gone to 

their offices and said, ‘‘Hey, we are GAO. We want to talk to you 

about how you handle phone calls,’’ I don’t expect we have got any 

of those examples provided to us from the Department of Labor. 

So this gives you a real picture of what it looks like if you are 

a victim of wage theft or some other violation of FLSA. 

Mrs. MCCARTHY. And, by the way, I do the same thing. I call my 

office to see how they answer the phone. 

Mr. KUTZ. It is a good process. 

Mrs. MCCARTHY. That is just something—because they are representing me. Well, let’s go on. As we go forward with this—and 

I am sure we are going to have another hearing on this—what do 

you think needs to be done to ensure all complaints are at least 

documented at the Department of Labor? 

Mr. KUTZ. Well, we believe they should be documented. I mean, 

if something is—they get a lot of calls probably that aren’t real 

cases, somewhat like our hotline. They might call about something 

that has nothing to do with a labor law violation. Those shouldn’t 

be given case numbers. 

But everything that comes into the system, like our 10 calls, 

should be given a case number. And even if they are not going to 

work it, they should keep it in the system, because what if that employer comes back again and has committed another wage law violation? Then you give off a trend of information. 

If you don’t report the information in the system, you can’t do 

linking of cases. So with our hotline—our FraudNet, we call it—we 

give case numbers to everything. And we go back, and I can determine where there were other Wage and Hour Division things or 

Medicaid, Medicare, whatever the case may be. We can go back and 

research by person, company, theme, et cetera, to determine what 

has happened in the past. 

And the first thing we do about a complaint coming in, have they 

been here before? 

Mrs. MCCARTHY. Just to follow up on that, my office, my district 

office, and my Washington office, anyone that calls for help, we 
59

open up a case file for them, and it goes into our computer so that 

we can have a running issue on what we are doing, what they are 

doing, and how it ends up in the case before it is closed. 

So I think that we are all trained that way, to basically make 

sure that we are tracking our constituents. And each member has 

over 600,000 people that we represent. 

What do you think, as we go forward, does Labor need to do to 

assist the situation and make sure that enough proper trained people are in place to adequately investigate allegations of wage theft? 

Mr. KUTZ. Well, they need to take a top-to-bottom look at this. 

It is not necessarily, do they need more people? Which they maybe 

do need more people. But it is better trained people, possibly. Are 

they hiring—what are the criteria of the people they are hiring? 

That is something we didn’t look at as part of this, but that is a 

valid question. I mean, do you have the right kinds of people? 

Because if you have investigators that are willing to take a ‘‘no’’ 

answer and just say, ‘‘Okay, we are done,’’ I have investigators that 

work for me. Not a one of them would accept that as an answer. 

I mean, they would at least follow up with a second question or a—

do something besides just say, ‘‘Okay, thank you,’’ and then they 

call the victim, the potential victim here, and say, ‘‘We are sorry. 

We can’t help you. They said no.’’

I mean, that is not really an investigation. I am not sure what 

you would call that. It is just a thing. It is a phone call we made. 

And so you heard our frustrated victim on the undercover call 

saying, ‘‘Is that all you do, just make a phone call?’’ And I think 

a lot of times, with the smaller cases, that is all that they do. 

Mrs. MCCARTHY. Last question. One of the other things that we 

do in our office—and I am going to ask if you think it is worthwhile 

to look into that for the Department of Labor, also—we retrain. 

Even if someone that has been with me for 13 years, every couple 

of years, we go through a whole retraining program, because new 

techniques are always coming up, new ways of handling things 

that were always coming up. 

I was just wondering if that would be something that would be 

important to do for the Department of Labor? 

Mr. KUTZ. Yes. Do they do something like that? 

Mr. MEYER. Yes, there are annual updates that investigators go 

through. I think a focus, though, needs to be shifted in some cases 

from compliance assistance and, you know, trying to go out there 

and walk the thin—the middle line between the complaint and the 

employer—to enforcement of laws. It is an emphasis on enforcing 

the laws on the books, needs to be re-emphasized with investigators every year to make sure they feel that their job is important 

and to get it done. 

Mrs. MCCARTHY. I yield back the balance of my time. Thank you. 

Chairman MILLER. Thank you. 

Mr. Roe? 

Dr. ROE. Thank you, Mr. Chairman. 

Just a couple of questions. Could you sort of put this in context 

about how many cases—you may have said this before I came in 

to the room, but I was at another committee hearing—but how 

many do they handle a person? Like you said, if you just answer 

the phone and say, ‘‘No,’’ that is hardly a case. 
60

But just a—I know from my experience and what I have done in 

a lifetime, I know how much I can do in a day’s work. How many 

cases—are these people just overwhelmed with the number of cases 

or what? 

Mr. KUTZ. There are 32,000 cases that were recorded in the system for 2007. And as I mentioned, a lot of cases don’t get recorded 

in the system, so we know it is more. We don’t know how many 

more. And they had 700 to 800 investigators for 2007, and they 

had—I think they have roughly about that amount. So that gives 

you an idea of the different volumes you are talking about. 

And cases are very different. A case can be one person or it can 

be thousands of people. So there is a wide range of what a case is. 

So not all cases are equal. Some cases could take thousands of 

hours to investigate; some could take a couple of hours. 

Dr. ROE. Well, and to follow up on that, I guess, and to follow 

up on some of the other—the questions that we asked was that—

is there any way to measure what kind of job they are doing? I 

mean, are there any kind of standards that they are doing, any 

oversight that they are doing? 

I know some of your testimony said they weren’t being very effective. But is there a way to measure that? We have that in most 

of our offices. We have standards, job evaluations, and so forth. 

Mr. MEYER. We measured these cases just based on the allegation that was filed and whether an adequate job was done of responding to that allegation and investigating it. 

In last year’s testimony, the other witness from GAO provided 

statements that Wage and Hour has continually shifted their goals 

and shifted their metrics they use to measure compliance so there 

wasn’t a consistent way to evaluate them over the years. 

But for our investigation, it was purely based on the case we 

were looking at and whether it was adequately responded to. 

Mr. KUTZ. But some information they have that is useful, I 

think. They say they collected about $220 million in 2007. Now, 

again, we know based on our work they probably collected less 

than that, because a lot of stuff in the system doesn’t ever get collected, but let’s say they collected about $200 million. That is useful to know. Their budget is about $200 million. Is that a good 

ratio? I don’t know. 

They helped 341,000 employees. Again, we probably think it is 

less than that, because we know some people they say that they 

helped, they weren’t helped, but there are also tens of thousands, 

maybe hundreds of thousands they didn’t help. 

So there is some useful information like that that—and the thing 

we don’t know, again, getting back to asking you—if they are asking you for more resources, what evidence do they have to show 

you what they will do with those resources and what return on investment that would be? See, if I was there, I would say, ‘‘Well, I 

want to show—if you give me an extra dollar, how much more can 

I collect for wage theft or other types of cases I can work to help 

victims here?’’

Dr. ROE. I agree. 

Thanks very much, Mr. Chairman. I yield back my time. 

Chairman MILLER. Thank you. 

Mr. Courtney? 
61

Mr. COURTNEY. Thank you, Mr. Chairman. 

And thank you for holding this hearing, which is a completely 

logical follow on to last July’s hearing where this issue was first 

identified and GAO testified, of course, at that hearing. 

And, also, for the record, for the benefit of people who are watching this hearing, I think it is important to know that Secretary 

Solis submitted a statement indicating that the Department is now 

hiring an additional 250 Wage and Hour Division case workers, 

which was the result of the 2009 spending bill, which some of us 

in this room supported and others did not, but clearly there is now, 

with the new administration, movement towards strengthening the 

workforce there. 

And additionally, there are another 100 workers that are being 

brought on as a result of the stimulus bill, the American Recovery 

and Reinvestment Act, which the president, again, signed into law 

just recently. So there is good news, at least in terms of the 

strengthening of the case workers, which has been identified by 

some here today as potentially the problem. 

The other one issue which we had discussed last July, a pattern 

that emerged from your investigation was that the prior—well, the 

Wage and Hour Division case workers that were interacting with 

complainants, were being told, ‘‘Well, go get a lawyer,’’ as sort of 

the way to close out the file. 

And, again, I just want to ask you a simple question. I mean, in 

fact, the mission of the Department of Labor is to provide free advocacy for workers who have been denied their wages and, in fact, 

not to force or direct them to private representation through lawyers, isn’t that correct? 

Mr. KUTZ. That is an important point, yes. And that gets back 

to the issue of resources. And is the mission to serve only those we 

have the resources to? Or is it to serve all the people that come in? 

Is the mission to serve greater than 10 numbers of people or, you 

know, greater than 7? That is an important issue, because it appears the reality is they are picking and choosing who they are 

able to serve. 

Mr. COURTNEY. And there clearly was an irony in last July, 

which was pointed out, which—because the morning of the hearing 

in the New York Times, the administration actually put out a 

statement saying that, you know, their goal was to, you know, stop 

trial lawyers from enriching themselves from this, and, in fact, the 

opposite was occurring, which is that people were being steered towards private counsel as a way of getting a remedy. 

And, again, I think certainly this Committee wants to go the direction of the original mission of the Department of Labor, which 

was to, again, as an administrative agency, provide people with 

help without having to incur the expense and difficulty of retaining 

private counsel. 

Mr. KUTZ. Well, and the reality is, if you are one person making 

$6 or $7 an hour, how many attorney’s fees hours can you afford? 

Mr. COURTNEY. And I guess the other question is that there is 

also a time issue. Now, again, I think throughout some of the notes 

you talked about the fact that—I mean, there is a statute of limitations for bringing a claim, is that correct? 

Mr. KUTZ. Correct, 2 years from the time of the violation, yes. 
62

Mr. COURTNEY. So if you filed a complaint, you are waiting, you 

are waiting, and then the case is closed out by saying, ‘‘Go get a 

lawyer,’’ I mean, the fact is, is that you are—that scenario makes 

it even worse for people. 

Mr. KUTZ. Right. Sometimes the clock runs out, and employers 

know that, and some of the egregious ones stalled, and eventually 

the case went away with no collections. 

Mr. COURTNEY. And, lastly, just looking at the locations of where 

some of these cases were—took place, I mean, I am seeing, you 

know, from the West Coast to the East Coast and in between. I 

mean, the fact is, is that this seems to be a much more widespread 

problem than one field office from, again, just the report that you 

have submitted here. I mean, is that a safe conclusion to make? 

Mr. KUTZ. I think we have done enough work to say that, yes, 

this is a national issue. We can’t say every single office has the 

same problems, but there are many, many offices that have these 

types of problems, yes. 

Mr. COURTNEY. Great. 

Thank you, Mr. Chairman. 

Chairman MILLER. Thank you. 

Mr. Sablan? 

Mr. SABLAN. Thank you, Mr. Chairman. And thank you for your 

leadership on this very important issue. 

Thank you, Mr. Kutz and Mr. Meyer. 

I am trying to learn something here. In your undercover testing, 

how did you arrive at the types of jobs to use to determine? This 

was very thorough, and I am trying to——

Mr. KUTZ. Yes——

Mr. SABLAN [continuing]. Was there a certain, you know, scientific testing you—or process you did? I am trying to determine 

if these are—if the lack of attention given to these cases are because they are for certain types of jobs or a—those making so much 

money per hour, or if they are, you know, minimum-wage-earners 

or—where is the lack of attention? Is it just endemic throughout 

the system for——

Mr. KUTZ. The undercover calls we made were what we thought 

were common complaints we had seen in the database. And the one 

was the child labor one. I will just give you the other—some examples. We did dry cleaners, convenience store, dishwasher, janitor, 

painter, lawn mower service. Those are pretty typical of what we 

have seen in the database of legitimate complaints coming in. 

So we tried to recreate what would be a legitimate complaint and 

legitimate scenarios out there. 

Mr. SABLAN. And this was done throughout the nation? 

Mr. KUTZ. Yes. Again, six offices, Baltimore, Birmingham, Dallas, Miami, San Jose, and West Covina, California. Those were the 

six offices we made those 10 calls to. 

Mr. SABLAN. Thank you, Mr. Chairman. 

Chairman MILLER. Thank you. 

Ms. Titus? Congresswoman Titus? 

Ms. TITUS. Thank you, Mr. Chairman. 

Gentlemen, you were asked if you have any evidence that the 

employees of the division had deliberately been told to mishandle 

cases. And, of course, the answer is no. But I have often found that 
63

lack of resources and capricious enforcement are generally the result and reflection of administrative priorities. 

So let me ask you that same question just a little bit differently. 

Do you have any evidence that the professionals in the Department, who should know what is needed to be effective, requested 

the resources or the tools that you say that they need? 

I mean, those tools seem to me to be pretty obvious. You are 

talking about training in customer service, recording of cases, access to information on bankruptcy. Is there any evidence that they 

were trying to do the best job that they could to serve these workers, help them get their wages? 

Mr. MEYER. I think speaking specifically to the information technology, when we raised the issue initially in our first audit and 

then in this follow-up audit, it seemed to be a new idea to the management in Washington, at the headquarters level, for Wage and 

Hour that it didn’t—it wasn’t something they had explored in the 

past. So I don’t know if—I don’t know if they considered it before 

this point. 

Ms. TITUS. And that is just shameful, it seems to me, a real derelict of duty, I think, because I believe it should be critical to use 

all the tools possible to help people get their wages. And that is 

why I am so pleased to have your report and that the chairman is 

making this a priority. 

Just one other kind of more technical question, too. You mentioned that, in states where you have strong enforcement of labor 

laws, you have a better result at the national level. I know in Nevada we have had some serious problems. Are there any things 

that we can do legislatively or as we look at the operations of this 

division and that relationship with states to improve the situation, 

so that even if you have a weak link at the state level, we can 

make it work better? 

Mr. MEYER. I think when Wage and Hour reassesses their staffing and the allocation of resources, it should be important for them 

to consider states with, let’s say minimum wages that are higher 

than the federal minimum wage. That makes a big difference on 

if the Federal Government should take a case or if the state should 

take a case. 

So that needs to be an important part of their consideration, because more resources are likely going to be needed in states where 

there is no state agency that can assist complainants. 

Ms. TITUS. Okay. 

Thank you, Mr. Chairman. 

Chairman MILLER. Thank you. 

Mr. Hare? 

Mr. HARE. Thank you, Mr. Chairman. 

I am not here today to finger-point and look backwards too much, 

but I think it really is important to point out to people that are 

watching this, the former Secretary of Labor, I saw her two times. 

I am in my second term. Once was in the back of a car with her 

husband at a parade running for re-election, Mitch McConnell, and 

the other was when President Obama was sworn in. 

I have not seen her at this Committee. But she sent the acting 

administrator, Alexander Passantino, I believe, who just basically 

said that you guys didn’t know what you were talking about. 
64

Also, which I—by the way, I couldn’t disagree with him more. I 

think you clearly do. 

Also, you have a Department of Labor that significantly cut funding for the Wage and Hour Divisions. And I am not suggesting that 

we throw people into a position and that you are going to solve this 

entire thing by having more people, but I do know that, when you 

cut the funding for the Wage and Hour Division, problems are 

going to occur. 

And, you know, I just find this, especially when you are talking 

about people’s salary, an honest—as mentioned, you know, an honest day pay for an honest day’s work, I find it almost unbelievable 

that people would do that and would treat people like that. 

And then, just lastly, before I have a question, you know, we are 

going to have comprehensive national health care. And for the people watching this hearing today, I can assure you that for those 47 

million Americans that don’t have it, I don’t think they are going 

to have to worry about who is answering the phone. I think they 

are going to have something at least that they can go to the hospital and get taken care of. 

My question to you, your investigation revealed an ineffective 

Wage and Hour Division that discouraged wage theft complaints. 

But in the situation when complaints were recorded and assigned 

as a case to an investigator, they were often adequately investigated. 

To me, this indicates that many of the problems at the Wage and 

Hour could be fixed by the dedication of more resources and a labor 

secretary with the will to address wage theft complaints. 

What are your thoughts on community partnerships, in other 

words, with—you know, partnering up so that more people can be 

served and in a timely fashion and with respect? 

And, by the way, I just want to say, I apologize for getting here 

late. I didn’t hear the complaints. But after listening to you testify, 

I can imagine just how egregious they were for people. Whether 

they were fictitious or not, the fact of the matter is, the person on 

the other end of the line didn’t know that. 

So I am wondering what you think about community partnerships, knowing the shortage of the staff and some other things, and 

maybe working with some nonprofits? 

Mr. KUTZ. I think that makes sense as part of an overall strategy 

for how they are going to address is, along with the states, as Mr. 

Meyer mentioned. If we have effective enforcement of states, it 

frees up the federal offices across the country to maybe take on bigger cases and not worry as much about the smaller cases. 

So partnership and leveraging resources—and I agree with you 

that just throwing money at this isn’t necessarily the answer. Part 

of the money needs to go to technology. Part of this needs to be better processes, maybe even a better phone system for handling the 

complaints that is much more customer-friendly. 

So it is a bigger picture, I think, than just putting more people 

on this. But community partnerships and working with states and 

others, it makes perfect sense to me. 

Mr. HARE. Do you think that the problems at the Wage and Hour 

are causing wage theft victims to not file complaints? In other 

words, when they hear that people are being treated like this or 
65

they get treated like—do people just start saying, ‘‘It is not going 

to do me any good to make the phone calls, so I am not even going 

to give them a call’’? 

Mr. KUTZ. Yes, I mean, actually, those 10 cases, we made 115 

calls, and 76 times it went directly to voicemail. And frequently we 

never got a call back. We had to call month after month to try to 

get them to call us back. 

So I think some people would give up eventually. So I really believe that what you said is true, that some people are not filing 

complaints because of that. And I mentioned that in my opening 

statement, also. 

Mr. HARE. And that would be—I mean, that is really a tragedy 

they are not filing a complaint because they just think it isn’t going 

to matter. 

Mr. KUTZ. Right. And they don’t—they are making, like I said, 

$6, $7, $9, $10 an hour, and getting an attorney is going to be a 

challenge. 

Mr. HARE. Let me just ask you this. I am almost out of time 

here. What are the one or two things that we can do, that this 

Committee, this Congress can do to make sure that ordinary people 

when they call in have at least a fighting chance to be able to get 

the wages that they feel they have been denied and that they have 

coming, so that they have, you know, as I said, for ordinary people, 

bureaucracy is tough enough as it is. 

So what can we do as a committee and a Congress, do you think, 

to help these people out? Because the bottom line is, we can fingerpoint all we want to, but it is helping the ordinary people out. 

Mr. KUTZ. I think one of the things legislatively we saw was that 

the 2-year statute of limitations sometimes when cases are ongoing 

end up running out because either they start late on the investigations at the Department or the employer stalls. Looking at specific 

targeted ways to possibly look at legislation in that area we are 

going to probably put in our recommendation and a matter for the 

Congress to consider. 

We don’t make policy, but we offer to you to consider policy. I 

think that is a situation where you could consider policy. 

The other thing I would say is, again, not walking away from 

this—and as Chairman Miller said—consistent oversight of this 

until you are satisfied that the systems, processes and controls in 

place are good and we could even go back for the Committee at 

some point in time and do similar tests to what we did this time 

and see if they do better. 

Mr. HARE. Thank you very much. 

I yield back, Mr. Chairman. 

Chairman MILLER. Thank you. 

Congresswoman Woolsey? 

Ms. WOOLSEY. Thank you, Mr. Chairman. 

Last session, my subcommittee, the Subcommittee on Workforce 

Protections, held a hearing on the lack of enforcement by the Wage 

and Hour Division of child labor laws. There was evidence to the 

contrary, but the former acting administrator, Passantino, testified 

at the hearing that child labor complaints were the division’s top 

priority. And he said that more than once. 
66

So in that regard, what did your investigation find? And what 

recommendations do you have for improvements in that area of 

child labor and including farm-worker children? 

Mr. KUTZ. With respect to child labor, you know, one of our undercover calls was a child labor call, because we knew that was a 

priority of the Labor Department. And their policy, I believe, or 

practice, at least, is that even if it is an anonymous tip, that they 

are supposed to open a case and look into it. 

So we planted an undercover call with them that kids were working during school hours, operating circular saws, meat grinders at 

this meat plant. And when we went back to look in the system, it 

wasn’t anywhere. It wasn’t recorded in the system. They hadn’t 

done anything with it. 

And so they were concerned about that, too, because they don’t—

they agree with your statement that that is a top priority. But the 

reality was, in that case, they didn’t do anything. 

We had seen a case like that last year, too, that was a child labor 

law complaint. So we don’t have a lot of experience, because not a 

lot of the actual recorded items in the system are child labor complaints, but in several cases now we have seen that maybe it is not 

such a priority if they are not actually following up. 

Ms. WOOLSEY. And if there was a scattering of instances like 

this, you have to know there are many, many more, right? I 

mean——

Mr. KUTZ. Certainly. I expect there are several others. 

Ms. WOOLSEY. That was—yes. 

Mr. KUTZ. I mean, you have to believe that. 

Ms. WOOLSEY. Well, then what is the deal? I mean, it comes from 

the top. So now with a new administration and a new Secretary of 

Labor, and then there will be new deputies and new heads of Departments, and with a new attitude, is that going to be enough to 

change this? Or is it really that the short-staffed, under-trained, 

lack of motivation, I don’t—lack of tools? I mean——

Mr. KUTZ. I think it is——

Ms. WOOLSEY [continuing]. You can’t make somebody do the job 

they are supposed to do if they don’t have the tools to do them. 

Mr. KUTZ. I don’t think you can point at one thing. I think, if 

you just focus on throwing staff at it, it is not going to solve the 

problem. That is one element possibly here. 

But as you mentioned, culture is one thing. The right people, 

enough of them. Are they properly trained? Do you have good processes in place? 

An example of that is, you know, if you accept the neighbor saying, ‘‘Well, the company is bankrupt,’’ and then you walk back to 

the office, you close the case, and say, ‘‘Yes, they are bankrupt,’’ 

well, we had cases like that. 

Ms. WOOLSEY. Right. 

Mr. KUTZ. And then we went back and looked in the system, and 

the company is not bankrupt. They just moved or they actually 

didn’t have trucks there that day or something like that. 

I mean, that is a matter of just bad processes. You should have 

a process that you are going to validate—if you are going to say 

in the system that someone is bankrupt, you should validate that 
67

with independent evidence that that, in fact, is true before you 

drop the case. 

Ms. WOOLSEY. So are there training programs that you, in your 

survey, were there employee training programs that would help the 

employee know how to research whether a person was bankrupt or 

not? Or do we just assume that person is supposed to know these 

things? 

Mr. MEYER. Based on the investigators and technicians we talked 

to, their training in that area relates to looking it up on public 

searches, if a local court keeps their records online or if there are 

some Google search results that will find a business. 

It doesn’t get to the level of sophistication that we have with 

public court records, federal court records, LexisNexis, some real 

robust technology. And I would also say, for child labor complaints, 

one way to make sure that they are dealt with is to force people 

to record the complaint when it comes in, because then there is at 

least a record that it is there. 

And I think it would be very hard for management at the Department of Labor to ignore those cases. And I think they really 

genuinely are concerned about them. But if it never makes it into 

the system and it is not on their database, no one knows about it. 

Ms. WOOLSEY. How about farm-labor kids? Was there anything 

in your survey, your report about them? 

Mr. MEYER. Our statistical sampling didn’t randomly pull up any 

farm labor, Migrant and Seasonal Worker Protection Act cases. 

However, through interviews in the field, we did see that a number 

of offices at the Department of Labor take time out of their year 

to specifically investigate MSPA cases. 

So it is an emphasis at Department of Labor how effective it is. 

Unfortunately, it just wasn’t pulled up in the random sample, so 

it wasn’t a large enough percentage for us to look at. 

Ms. WOOLSEY. Well, Mr. Chairman, I would believe, with Hilda 

Solis as the new Secretary of Labor, that farm kids are going to 

have a lot more emphasis than they have in the past, and children 

in general. 

Thank you very, very much. 

Chairman MILLER. Thank you. It is the intent of the chair that 

this Committee hearing will end at noon, but we will have a second 

round, if members want to participate. 

One of the things that concerns me in this construct is the person who may be most financially vulnerable to lost wages, in terms 

of major disruptions in their life—they could lose a car payment, 

they could lose a house payment, they could lose their rent, they 

could be evicted—they are the person that really has the least—has 

no margins for error. 

So you lose $800 in a paycheck, whether that is, again, over a 

week or 2 weeks, whatever period of time that paycheck has come 

in for, you lose that $800, you don’t have margins. Turning to an 

attorney isn’t really an option for an $800 case. And yet those are 

the cases that are quickly reconciled, either yes, no, maybe, thank 

you very much. 

So they get the least resources focused on them, and yet they are 

the most vulnerable. There is something wrong in that system. I 

understand why you would do it, because if somebody is with-
68

holding—failed to pay a couple of million dollars or hundreds of 

thousands of dollars, that seems more important, unless you happen to be that person that lost the $800 paycheck. 

So it seems to me you have an obligation to do a very thorough 

investigation, maybe not terribly time consuming, but a very thorough investigation at the outset for that individual. Does that 

make any sense? I mean, the system seems to be tilted a little bit 

away from the average worker in the occupations that you cited. 

Mr. KUTZ. Yes, the system is tilted away. And it gets back to, 

what is the mission? Is the Department willing to spend $3,000 to 

collect $800 for an employee? And that isn’t just—you can’t just 

look at it as a cost basis, too. You look at future compliance and 

things like that. So just working to make sure that these employers 

know that they will go after some of those smaller cases can also 

help future compliance. 

But the reality now is they are kind of picking and choosing, it 

appears, because of issues with resources and technology and whatever the case may be. 

Mr. MEYER. I would also add that, for conciliation specifically, 

right now Wage and Hour’s policy is to make one or several phone 

calls. And if it doesn’t result in collections, they drop the case at 

that point. 

And most of the time, those are actually effective. The ones that 

we looked at in the database, most of the time a normal employer 

will comply once they have been told they have broken the law in 

some area. 

But the ones that don’t should be raised to the level of a full investigation and followed up on. So you can have a rapid response 

and a more thorough response in those limited cases. 

Chairman MILLER. And, Mr. Meyer, I assume you are saying 

that, given your—that maybe some of these people aren’t the best 

trained in how to be the most effective on the phone or what resources they should bring in advance to that phone call. Maybe a 

little bit of work before the phone call and you speak with more 

authority, possibly. 

Mr. MEYER. True. There is very little work done before that first 

phone call——

Mr. KUTZ. Well, not only that. I mean, you did hear some of 

those. They simply said, ‘‘Are you willing to pay?’’ The answer was 

no. ‘‘Okay.’’ I mean——

Chairman MILLER. So the employer steals $800 out of my paycheck, whether it is overtime or regular pay, and the likelihood 

maybe is that nothing will happen. That employee steals $800 out 

of petty cash in that company, and that employee is going to jail. 

In all likelihood, that employee is going to jail. 

So you steal it out of their paycheck, you go past jail. You are 

free. You steal it out of petty cash, you are going to go to jail. 

I mean, somehow there has to be an initial investigation that understands what took place here. This isn’t—you know, in many of 

these—this isn’t a bookkeeping error. This is a conscious decision 

not to obey the law. 

Mr. Meyer, you talked about—they have to understand they are 

there to enforce the law, the minimum wage law, the overtime 

laws, you know, the hours worked, all of those things. 
69

So a conscious decision in many of these instances is simply 

made not to pay these individuals. A conscious decision to rob that 

business and you have two different—you have two different outcomes. 

Mr. KUTZ. Right. If you have a situation now where employers 

know probably that, worst-case scenario, they may get investigated 

and, if so, they might have to pay what they owed in the first 

place, I mean, so you have that kind of a system out there——

Chairman MILLER. There is no penalty. 

Mr. KUTZ. There is no penalty. 

Chairman MILLER. You steal from the employee, there is no penalty. You steal from the employer, you go to jail. 

Mr. KUTZ. You are not going to get criminal, sure. There is no 

criminal. And so worst case, you pay what you owe, and sometimes 

you compromise it down to something less than you owe. So it is 

a system with minimal teeth to it at this point. 

Chairman MILLER. And there are 30,000 complaints in this system in 2007? 

Mr. KUTZ. Correct. 

Chairman MILLER. We heard when you were here in July from 

Wage and Hour that they suggested that they resolve 93 percent 

of their cases, where employers agreed to pay. Does that mean they 

got 93 percent of the wages that were wrongfully taken returned? 

Mr. KUTZ. No. No. 

Chairman MILLER. What does that mean? 

Mr. KUTZ. Well, that is what is recorded in the system. As I mentioned for our undercover calls, in several cases, the employer initially agreed to pay. And several weeks later, our fictitious employee called back and said, ‘‘By the way, investigator, they never 

paid me.’’ We went back into the system several months later, and 

all those cases showed that the case was actually paid. 

So they are recording as paid if the employer says, ‘‘I paid,’’ but 

they don’t go back to follow up or, even if someone calls and says 

they never were paid, they don’t go back and change the records. 

Another important thing is——

Chairman MILLER. So not only now is the employer stealing from 

his employees, he is now lying to the government? 

Mr. KUTZ. Correct. 

Chairman MILLER. To the enforcement agency? 

Mr. KUTZ. And we are recording it as a successful case, even 

though he didn’t pay. 

Chairman MILLER. Right. Yes, I would say we have a cultural 

problem here, if that is success. I don’t think that is success for 

anybody on this Committee. 

Mr. KUTZ. The other thing I wanted to mention on that, too, 

there is another case that we saw, too, that is very interesting. The 

actual amount owed was $150,000, but the amount assessed ultimately was $78,000, so it was compromised. What they recorded in 

the system was assessed $78,000, paid $78,000. 

So in that case, it appeared that 100 percent was paid. The reality is, 50 percent was paid, because they owed $150,000. So you 

always have to get behind these numbers like 93 percent and say, 

is there something more to the story than 93 percent? 
70

So you have several factors. I am not saying they are not collecting hundreds of millions. They probably are. But that number 

is probably overstated based on a number of cases we have seen. 

Chairman MILLER. You know, you touched upon also the issue 

that about money and workload and the rest of that. It is kind of 

interesting that, as I look at the chart here, I think this is from 

CBO—the money went down 4 percent—a little—4.2 percent from 

2001 to 2008, but the full-time employees went down 21 percent, 

21 percent, 22 percent, 23 percent. 

So, I mean, it wasn’t—apparently, you know, it wasn’t money. 

They just decided they were going to—I don’t know if these people 

went somewhere else or whether they were discharged or what 

have you, but the numbers in the Department—in the Wage and 

Hour Division, the employees went down continuously over this 

time 21 percent, but the money to the appropriated dollars didn’t 

go down. 

Mr. KUTZ. Right. The number of investigators has gone down 

from 1997 to 2007 by 20 percent to 25 percent, in that range. 

Chairman MILLER. Right. 

Mr. KUTZ. Correct. 

Chairman MILLER. Let me ask you—one of my colleagues raised 

the issue of the statute of limitations. This clearly works absolutely 

against from—at least my conclusion is, from looking at these 

cases, if the Department is not efficient, they are working on my 

time if I have a statute of limitations running against me and my 

ability to recover. 

Is there—have you thought about what the alternative would be 

for starting the statute or——

Mr. KUTZ. Well, we believe that—we were going to put a proposal into our report that has recommendations for a matter for 

Congress and to consider whether or not the statute should be extended. I am not sure what the right wording necessarily or how 

you would write the bill. 

In certain cases where there is a legitimate claim, Wage and 

Hour is investigating it, but the clock stops ticking, and that would 

be something that would help not only the Wage and Hour Division, but the victims who we see oftentimes get nothing——

Chairman MILLER. You would hold that during the investigation? 

Mr. KUTZ. Yes, yes, I think that is the right term. I—yes. 

Chairman MILLER. Yes, okay. And so then, if they did a good 

job—maybe I get my money back——

Mr. KUTZ. Yes. 

Chairman MILLER. If they didn’t or they refused to or whatever 

the case was, I still have my right, if they used up 6 months of the 

time, I still have my full 2 years to proceed against the employer 

and have time to do that? 

Mr. KUTZ. Or at least more time, because let’s say it takes you 

a year to get to the first point. You would at least have an extra 

year. It depends on how you write the bill or how you would write 

that legislation, but, yes, you would have time to see if Wage and 

Hour could resolve it. And if they can’t, you would still have at 

least a period to file your own lawsuit. 

Chairman MILLER. When you look at other agencies, are there 

agencies that have better models in terms of measuring outcomes 
71

and user-friendly, customer-friendly systems in intake and initial 

investigations that the Department of Labor should be looking at? 

Mr. KUTZ. Well, I thought the interesting idea—and I don’t remember which member it was that mentioned the monitoring of 

the calls to determine whether people—how people are handling 

the actual people—that is an interesting idea. I have seen—at IRS, 

I have observed how they do it. 

And I think in that case they know that they are doing it, or at 

least randomly doing it, but it keeps people on their toes and it 

makes people know that we are measuring this as one of the considerations in your job rating and the pay for performance you are 

going to get or whatever raises you might get. 

So that was an interesting idea, I thought, that could be used on 

the complaint intake process. 

Chairman MILLER. That would also let you know whether or not 

that case was entered into the system so that you would have follow-up or you would have data about that employer or that industry or the rest of it, would help you develop reliable data if that 

phone call was matched to a decision. 

Mr. KUTZ. Yes, you have to hold the Department of Labor accountable to make sure that all legitimate cases are entered into 

the system, because otherwise Congress doesn’t have a very good 

idea of what kind of work is not getting done. 

It would be nice for you to know that there were 6,000 cases, or 

whatever the number is, that they just didn’t have time to get to. 

Chairman MILLER. You have——

Mr. KUTZ. That would be an important metric. 

Chairman MILLER. You have mentioned the IRS. Do you know of 

other agencies that have done that or——

Mr. KUTZ. With respect to metrics or other processes? 

Chairman MILLER. Monitoring calls or——

Mr. KUTZ. I would have to think about that. We could certainly 

think about that and get back to you no that. 

Chairman MILLER. Thank you. 

Mr. Roe? 

Dr. ROE. Thank you, Mr. Chairman. 

Obviously, when you see an investigation like this, it is embarrassing, when you see a performance that is this poor. My bet is, 

there are a lot of people that are doing good work, too. And I suspect——

Mr. KUTZ. We agree. 

Dr. ROE [continuing]. That there are a lot of good people who go 

to work every day and try to do their job correctly. And it would 

look to me like—and I have been in the private world my entire 

career, except for the last 90 days, and it would look to me like 

that it would be easy to ferret out or, with the proper supervision, 

who these essentially bad actors are that are not doing their job 

well. 

And, you know, this is just not acceptable to have a citizen of the 

United States call in to one of our Departments and be essentially 

just blown off. And, I mean, it doesn’t look to me like a terribly difficult problem to fix. 

And like you said, whether it is—throwing more money at it may 

not be. It may just be having some requirements, some oversight. 
72

And I think having these random calls that are fictitious come in 

is a good idea. That is a way to find out if it—and it may be just 

a few people that you are—I don’t know whether you got to the 

same investigator each time or not, but that would be a pretty easy 

thing, I think, to hone in, I bet. 

Mr. KUTZ. Well, what you are getting to, too, is the possibility 

of agencies testing themselves. You know, we have tested, for example, airport security by the TSA using—trying to get improvised 

explosive devices through the checkpoints on the aircraft. They test 

themselves, also. I mean, this is a case where you could have a unit 

set up in quality control that makes various calls just to see how 

they are handled. 

I think some of the members here have said even they call their 

own telephone system to see how their employees are handling potential constituents. 

Dr. ROE. You know, I think it would be—obviously, you all—we 

all know the story of the one mailman who is dumping the mail 

in the garbage truck so he doesn’t have to deliver the mail, and it 

may not be a deep problem, but it is a problem. And it needs to 

be solved. 

And I think there needs to be a mechanism to do that and report 

back to this Committee. 

I yield back my time, Mr. Chairman. 

Chairman MILLER. Thank you. 

Mr. Kildee? 

Mr. KILDEE. Thank you, Mr. Chairman. 

Thank you, gentlemen, for all you have done. I am the one who 

mentioned the monitoring of calls, and that is—I ask this question 

in conjunction with that, but other things. 

What needs to be done to ensure that all complaints are at least 

documented at Wage and Hour Division, both technological things 

and personnel things? What can assure us that they are at least 

documented? 

Mr. KUTZ. Well, sorry I didn’t give you credit for that. I had lost 

track of who actually made the comment, but it was a good idea 

nonetheless. 

I would say that they need to make sure that they have written 

policies and training, that it is a requirement that when a legitimate case comes in the door, not a case that has nothing to do with 

any violations, cases that are within their jurisdiction, things that 

whether they investigate or not, they need to know about, the policy should be to record it in the system. 

Policy guidance was sent out in the southeast region that 

conciliations or the smaller cases are not to be recorded in the system if they are failed. That needs to be changed. Those cases need 

to go in the system so there is a record that that—even if you 

didn’t investigate it, that that employer committed a potential 

labor law violation so, if they do another one, you can go back and 

research in the system, say, ‘‘Hey, they have been here before. 

Maybe this should become a bigger case now, because we have had 

three or four complaints come in.’’

So it needs to be a requirement, a policy, and it needs to be 

training. 

Mr. KILDEE. Thank you, Mr. Chairman. 
73

Chairman MILLER. Mr. Payne? 

Mr. PAYNE. Thank you very much. 

Since I missed most of the—all of the testimony, I will pass this 

time. Very rare for me, but I will do that at this time. 

Chairman MILLER. [OFF MIKE] 

Mr. PAYNE. All right. Thank you. Next time I will have twice as 

much time. 

Chairman MILLER. You have credits this time. 

Mr. PAYNE. All right. Thank you. Thank you very much. 

Chairman MILLER. Mr. Hinojosa? 

Mr. HINOJOSA. Thank you, Mr. Chairman, for having this hearing. I apologize that I was not able to be here at the beginning of 

this session, but I have a great deal of interest in the subject that 

was being discussed here today. 

I would like to ask you about conciliation. What is the percentage 

of conciliations you estimate are never reported? 

Mr. KUTZ. There is no way to know. But in the southeast region, 

as I mentioned, which gets 50 percent of the—57 percent of the recorded conciliations, the policy has been, if it is not successful, you 

don’t record it in the system. So it certainly is hundreds, potentially thousands. We just—since they are not recorded, there is no 

way to know. 

Mr. HINOJOSA. What remedies would you suggest to improve the 

timeliness of processing complaints? 

Mr. KUTZ. Processing of conciliations or——

Mr. HINOJOSA. No, just complaints that are brought to you. What 

do you suggest so that it will be more timely at—there is a response? 

Mr. KUTZ. Well, that is a big issue. And many of the regions 

around the country have known backlogs that are 8 months, 10 

months, 12 months, whatever the case may be. 

Those are region-specific issues in some cases. In some cases, 

they are national issues. So I think, on a region-by-region basis, 

they have to assess whether they have sufficient staffing on board. 

And they have standards for how quickly they intend to get to 

cases and investigate cases. They need to make sure they have sufficient staffing, technology and training so that they can meet 

those. And right now, many regions—and Mr. Meyer could probably add comments on some of the regions that had the most significant problems—many regions don’t meet those standards. 

Mr. MEYER. Right. I would say, looking at the different offices we 

interviewed with, some have adequate resources and are responding—you know, a caseload for an investigator might be three or 

four cases, whereas in a different part of the country someone has 

8 to 10 cases on their desk and, when they get the case, it has already been 6, 8, sometimes 12 months since the complaint was 

originally filed. 

So there needs to be a review of where the resources are in the 

Department of Labor, where they need to be shifted to, and then, 

after that review has been done, decide if there are more resources 

that need to be allocated. 

Mr. HINOJOSA. I know that you all have worked very hard. And 

based on the calls you made, what are some of the key areas that 
74

need to be addressed, in your view, to better serve low-wage workers, hourly workers who are calling with allegations of wage theft? 

Mr. KUTZ. Well, I mean, first of all, calls need to be returned. 

And a lot of calls were not returned. We went to voicemail, and 

they didn’t call us back, so at a minimum you should at least call 

people back. 

We mentioned recording cases in the system, following up to 

make sure that, if an employer agreed to pay, that they actually 

pay, and if the employer reneged on an agreement to pay, you go 

back into the system and you correct the system to say that employer refused to pay and they did not pay. 

It is a matter of customer service and the quality of the investigations that are done, but I think one of the big things you need 

to consider is making sure that people are handled with dignity, respect, and timely responses with respect to their allegations. 

And if they can’t get to their allegations for several months, they 

have to be told that upfront. And in some cases, they are. And as 

Mr. Meyer mentioned, some offices, they are very prompt getting 

to people, because they appear to have enough staff in place. Other 

ones are so overwhelmed, I think those are the ones that they are 

not even calling back people in some cases. 

Mr. HINOJOSA. Knowing that it takes maybe months to address 

all the complaints, what types of problems did you identify that 

could be causing victims to get discouraged and not want to call 

again or notify WHD of their complaint? 

Mr. KUTZ. Well, if someone tells you that, if you file a complaint 

your employer might fire you, that would discourage me from probably filing a complaint. So, you know, just some of the phone calls 

we played or people lying—I mean, you know, that was just one 

case. But it was discouraging that someone would actually lie to us 

and say they checked with the IRS, and they found that our fake 

company was below $500,000 in revenues. 

So be truthful with people, be straight with them, and handle 

them with dignity and respect, is the way we would suggest that 

they handle it. 

Mr. HINOJOSA. And being that my time is almost running out, 

give us a recommendation for improvement. What do you believe 

the mission should be of WHD? 

Mr. KUTZ. I think it should be a combination of—encouraging 

volunteer compliance. The vast majority of companies in this country are going to want to do the right thing. And you handle them 

differently than the minority, which is going to either want to violate the law or be on the fence and, especially in tough times like 

this, maybe say, ‘‘Hey, I can stay in business 2 more months if I 

don’t—if I stiff a few employees,’’ kind of a thing. 

And so you have got to handle the enforcement side aggressively, 

which I think helps enforce or actually encourage future compliance, but the vast majority of companies that are trying to comply, 

as Mr. Meyer said, if you call them up, tell them that they have 

violated the law, they owe money, they actually pay. 

Mr. HINOJOSA. Thank you. 

Thank you, Mr. Chairman. 

Chairman MILLER. Thank you. 

Mr. Hare? 
75

Mr. HARE. Thank you, Mr. Chairman. 

Just trying to wrap my mind around what the chairman said 

about, if somebody steals $800 from the company, they are going 

to jail; somebody steals it from the employee, you know, you are 

lucky if anybody does anything about it. 

This question may have been asked and answered, and I apologize if it has, but I am trying to get from your perspective, for the 

people who do the kinds of things that they are not supposed to 

do—they hang up or they return—you know, what is the recommendation to be able to weed these employees out so that they 

don’t continue to do what they have been doing, which is either not 

talking to these people, hanging up on them, giving them false information, et cetera? 

So from your perspective, what does Wage and Hour need to do 

to identify these people and then to get people in there that are actually going to be able to get the job done so that ordinary people 

can get that $800? 

Mr. KUTZ. Well, the 10 we did that were played at the beginning 

of the hearing, management has asked for the names of those people and the information we have. And we will share that with 

them. The individual that lied we have referred to the Office of Inspector General. 

With respect to the other things we have talked about here, such 

as the—Mr. Kildee talked about the potential monitoring of this, et 

cetera. Those are ideas where you could do enhanced quality control procedures to weed out the employees that don’t perform, that 

don’t treat people well on the phone, who don’t make phone calls 

back, or who do poor investigations. 

So having a better quality control system in place, performance 

management system, and then, again, hiring and training people, 

are we—what kind of people—we didn’t look at that. But what kind 

of people are they hiring? What kind of training are they giving 

them? What backgrounds are they? 

You know, when we hire law enforcement people, for example, as 

our criminal investigators with former executive branch experience. 

Those are people that have actually worked out there in the law 

enforcement field. They have served warrants. They have arrested. 

They have done undercover work before. 

So we bring in people with very specific qualifications. Or our 

auditors and analysts, we look for very specific qualifications. I 

don’t know exactly what their hiring is, but it is important to target the right people. 

Mr. HARE. Thank you. 

Thank you, Mr. Chairman. 

Chairman MILLER. Thank you. 

Thank you very much for your testimony this morning and for 

your investigation. And if you will thank your co-workers who participated in this, I would appreciate that. And thank you for all of 

the work that your office does on behalf of the taxpayers in this 

country and the committees of Congress. We appreciate it. 

And we would like to be able to continue to use you as an intellectual resource here, as we think about what changes make sense 

and not, and go forward on this problem. Thank you. 

With that, the Committee stands adjourned. 
76

Take 21 days, 14 days for submit statements—all the usual 

unanimous consent requests are granted to the minority for today. 

[Whereupon, at 11:48 a.m., the Committee was adjourned.]

Æ