Fair Labor Standards Act: The Department of Labor Should Adopt a More Systematic Approach to Developing Its Guidance
Published: 2013-12-18T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The FLSA sets federal minimum wage and overtime pay requirements applicable to millions of U.S. workers and allows workers to sue employers for violating these requirements. Questions have been raised about the effect of FLSA lawsuits on employers and workers and about WHD's enforcement and compliance assistance efforts as the number of lawsuits has increased. This report (1) describes what is known about the number of FLSA lawsuits filed, and (2) examines how WHD plans its FLSA enforcement and compliance assistance efforts. To address these objectives, GAO analyzed federal district court data from fiscal years 1991 to 2012 and reviewed selected documents from a representative sample of lawsuits filed in federal district court in fiscal year 2012. GAO also reviewed DOL's planning and performance documents and interviewed DOL officials, as well as stakeholders, including federal judges, plaintiff and defense attorneys who specialize in FLSA cases, officials from organizations representing workers and employers, and academics about FLSA litigation trends and WHD's enforcement and compliance assistance efforts.
section_title: What GAO Found
paragraphs: Substantial increases occurred over the last decade in the number of civil lawsuits filed in federal district court alleging violations of the Fair Labor Standards Act of 1938, as amended (FLSA). Federal courts in most states experienced increases in the number of FLSA lawsuits filed and the percentage of total civil lawsuits filed that were FLSA cases, but large increases were concentrated in a few states, including Florida and New York. The number of workers involved in FLSA lawsuits is unknown because the courts do not collect data on the number of workers represented. Many factors may contribute to this general trend; however, the factor cited most often by stakeholders, including attorneys and judges, was attorneys' increased willingness to take on such cases. In fiscal year 2012, an estimated 97 percent of FLSA lawsuits were filed against private sector employers, often from the accommodations and food services industry, and 95 percent of the lawsuits filed included allegations of overtime violations.
The Department of Labor's (DOL) Wage and Hour Division (WHD) has an annual process for planning how it will target its enforcement and compliance assistance resources to help prevent and identify potential FLSA violations, but it does not compile and analyze relevant data to help determine what guidance is needed, as recommended by best practices previously identified by GAO. In planning its enforcement efforts, WHD targets industries it determines have a high likelihood of FLSA violations. Although WHD does not analyze data on FLSA lawsuits when planning its enforcement efforts, it does use information on its receipt and investigation of complaints about possible FLSA violations. In developing its guidance on FLSA, WHD considers input from its regional offices, but it does not have a systematic approach that includes analyzing relevant data, nor does it have a routine, data-based process for assessing the adequacy of its guidance. For example, WHD does not analyze trends in the types of FLSA-related questions it receives. Since 2009, WHD has reduced the number of FLSA-related guidance documents it has published. According to plaintiff and defense attorneys GAO interviewed, more FLSA guidance from WHD would be helpful, such as guidance on how to determine whether certain types of workers are exempt from overtime pay and other requirements.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Secretary of Labor direct the WHD Administrator to develop a systematic approach for identifying and considering areas of confusion that contribute to possible FLSA violations to help inform the development and assessment of its guidance. WHD agreed with the recommendation, and described its plans to address it.

section_title: Letter
paragraphs: After 75 years, the Fair Labor Standards Act of 1938 (FLSA), as  amended, remains the primary federal law that sets minimum wage and  overtime pay standards applicable to most U.S. workers. The  Department of Labor’s (DOL) Wage and Hour Division (WHD) is  responsible for ensuring that employers comply with the FLSA, and  workers may also file private lawsuits to recover wages they claim they  are owed because of a violation of the act, such as an employer’s failure  to pay overtime compensation to workers who are entitled to it. In July  2008, we found that WHD did not effectively take advantage of available  information and tools in planning and conducting its enforcement and  compliance assistance activities, and we recommended that WHD  establish, maintain, and report on performance measures for the FLSA.
More recently, as the number of FLSA lawsuits has increased, questions  have been raised about the effect of the FLSA on employers and workers  and about WHD’s enforcement and compliance assistance efforts.
This report examines the following questions:  1.  What is known about the number of FLSA lawsuits filed?  2.  How does WHD plan its FLSA enforcement and compliance  assistance efforts?
To describe what is known about trends in the number of FLSA lawsuits  filed, we analyzed data from the federal district courts for fiscal years  1991 through 2012 provided by the Federal Judicial Center. We also  reviewed complaints from a randomly selected and generalizable sample  of 97 FLSA lawsuits filed in federal district courts in fiscal year 2012 to  generate estimates about selected characteristics of such lawsuits. We  did not review FLSA lawsuits filed in state courts or cases from the  federal appeals courts. To describe how WHD plans its FLSA  enforcement and compliance assistance efforts, we reviewed the  agency’s planning and performance documents and its published  guidance on FLSA enforcement and compliance assistance. We also  compared WHD’s planning process to internal control standards and best  practices that we have previously identified. We did not assess WHD’s  implementation of its enforcement and compliance assistance plans. To  inform both objectives, we interviewed DOL officials, attorneys who  specialize in wage and hour cases, federal judges, officials from  organizations representing workers and employers, and academics about  FLSA litigation trends and WHD’s enforcement and compliance  assistance activities, and reviewed relevant federal laws and regulations.
We conducted this performance audit from November 2012 to December  2013 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives. For more information on  our scope and methodology, see appendix I.
subsections: section_title: Background
paragraphs: The FLSA requires that workers who are covered by the act and not  specifically exempt from its provisions be paid at least the federal  minimum wage (currently $7.25 per hour) and 1.5 times their regular rate  of pay for hours worked over 40 in a workweek. The act also regulates  the employment of youth under the age of 18 and establishes  recordkeeping requirements for employers, among other provisions.  There are a number of exceptions to the requirements of the FLSA; for  example, independent contractors are not covered by the FLSA, and  certain categories of workers, such as those in bona fide executive,  administrative, or professional positions, are exempt from the minimum  wage requirements, overtime requirements, or both. WHD has issued  regulations implementing the FLSA that further define these exemptions  and other requirements of the FLSA.
The mission pursued by DOL through its WHD is to promote and achieve  compliance with labor standards to protect and enhance the welfare of  the nation’s workforce. The FLSA authorizes DOL to enforce its  provisions by, for example, conducting investigations, assessing  penalties, supervising payment of back wages, and bringing suit in court  on behalf of employees. DOL’s WHD also conducts a range of  compliance assistance activities to support employers in their efforts to  understand and meet the requirements of the law. WHD’s enforcement  and compliance assistance activities are conducted by staff in its 52  district offices, which are located throughout the country and managed by  staff in its five regional offices and Washington, D.C. headquarters.
subsections: section_title: WHD’s Enforcement of the FLSA
paragraphs: In response to complaints of alleged FLSA violations it receives from  workers or their representatives, WHD conducts several types of  enforcement activities. These range from comprehensive investigations  covering all laws under the agency’s jurisdiction to conciliations, a quick  remediation process generally limited to a single alleged FLSA violation  such as a missed paycheck for a single worker. Before WHD initiates an  investigation of a complaint, it screens the complaint to determine, among  other factors, whether the allegations, if true, would violate the law, and to  ensure the statute of limitations has not expired. If WHD identifies a  violation through an enforcement activity, but the employer refuses to pay  the back wages or penalties assessed, DOL’s Office of the Solicitor may  sue the employer on behalf of the affected workers. In fiscal year 2012,  WHD conducted investigations or conciliations in response to about  20,000 FLSA complaints and DOL’s Office of the Solicitor filed about 200  federal lawsuits to enforce the requirements of the FLSA on behalf of  workers.
In addition to responding to complaints, WHD enforces the requirements  of the FLSA by initiating investigations of employers by targeting  industries it believes have a high probability of violations but a low  likelihood that workers will file a complaint. In fiscal year 2012, WHD  concluded about 7,000 targeted FLSA investigations.
section_title: WHD’s FLSA Compliance Assistance
paragraphs: WHD encourages compliance with the FLSA by providing training for  employers and workers and creating online tools and fact sheets that  explain the requirements of the law and related regulations, among other  efforts. The agency refers to these efforts collectively as compliance  assistance. One form of FLSA compliance assistance WHD provides is  written interpretive guidance that attempts to clarify the agency’s  interpretation of a statutory or regulatory provision. WHD disseminates  this guidance to those who request it—such as employers and workers— and posts it on the WHD website for public use. WHD’s interpretive  guidance includes opinion letters which apply to a specific situation.  However, in 2010, WHD stopped issuing opinion letters and indicated that  it would instead provide administrator interpretations, which are more  broadly applicable. As a result of the Portal-to-Portal Act of 1947, which  established a “safe harbor” from liability under the FLSA for employers  that rely in good faith on a written interpretation from WHD’s  administrator, certain WHD written guidance could potentially provide a  “safe harbor” in FLSA litigation.
section_title: Lawsuits Filed by Workers Alleging Violations of the FLSA
paragraphs: The FLSA also grants workers the right to file a private lawsuit to recover  wages they claim they are owed because of their employer’s violation of  the act’s minimum wage or overtime pay requirements. WHD cannot  investigate all of the thousands of complaints it receives each year  because of its limited capacity. Therefore, the agency informs workers  whose complaints of FLSA violations are not investigated or otherwise  resolved by WHD of their right to file a lawsuit. Workers filing an FLSA  lawsuit may file in one of the 94 federal district courts, which are divided  into 12 regional circuits across the country.
FLSA lawsuits may be brought individually or as part of a collective  action. A collective action is a single lawsuit filed by one or more  representative workers on behalf of multiple workers who claim that an  employer violated the FLSA in similar ways. The court will generally  certify whether an action meets the requirements to proceed as a  collective; in some cases, the court may decertify a collective after it is  formed if the court subsequently determines that the collective does not  meet those requirements. In such cases, the court may permit the  members of the decertified collective to individually file private FLSA  lawsuits.
section_title: FLSA Lawsuits Have Increased Substantially over the Last Decade and Share Some Characteristics
subsections: section_title: FLSA Lawsuits Have Multiplied over the Last Decade and Most Were Filed in a Few States
paragraphs: Over the last two decades, the number of FLSA lawsuits filed nationwide  in federal district courts has increased substantially, with most of this  increase occurring in the last decade. Since 1991, the number of FLSA  lawsuits filed has increased by 514 percent, with a total of 8,148 FLSA  lawsuits filed in fiscal year 2012. Since 2001, when 1,947 FLSA lawsuits  were filed, the number of FLSA lawsuits has increased sharply (see fig.  1). Not only has the number of FLSA lawsuits increased, but they also  constitute a larger proportion of all federal civil lawsuits than they did in  past years. In 1991, FLSA lawsuits made up less than 1 percent (.6  percent) of all civil lawsuits, but by 2012, FLSA lawsuits accounted for  almost 3 percent of all civil lawsuits, an increase of 383 percent.
These increases, however, were not evenly distributed across all states.  In fact, while federal district courts in most states saw increases in both  the number of FLSA lawsuits filed and the percentage of all civil lawsuits  filed that were FLSA lawsuits, increases in a small number of states were  substantial and contributed significantly to the overall trends. In each of  three states—Florida, New York, and Alabama—more than 1,000 more  FLSA lawsuits were filed in fiscal year 2012 than in fiscal year 1991 (see  fig. 2). Since 2001, more than half of all FLSA lawsuits were accounted  for by filings in those three states. About 43 percent of FLSA lawsuits filed  nationwide during this period were filed in either Florida (33 percent) or  New York (10 percent). At the same time, the percentage of all federal  civil cases that were FLSA cases in those three states also increased  significantly. In both Florida and New York, growth in the number of FLSA  lawsuits filed was generally steady, while changes in Alabama involved  sharp increases in fiscal years 2007 and 2012 with far fewer lawsuits filed  in other years. Each spike in Alabama coincided with the decertification of  at least one large collective action, which likely resulted in multiple  individual lawsuits. From 1991 to 2012, while most states experienced  increases in the number of FLSA lawsuits filed, the proportion of civil  lawsuits that were FLSA lawsuits, or both, these trends were not  universal. In 14 states, the number of FLSA lawsuits filed in 2012 was  less than or the same as the number of FLSA lawsuits filed in 1991, and  in 10 states the proportion of civil lawsuits FLSA cases made up was  smaller in 2012 than in 1991.
While many factors have likely contributed to the overall increase in FLSA  lawsuits and stakeholders we interviewed cited multiple factors, they most  frequently cited increased awareness about FLSA cases and activity on  the part of plaintiffs’ attorneys as a significant contributing factor. Many  stakeholders, including two plaintiffs’ attorneys, told us that financial  incentives, combined with the fairly straightforward nature of many FLSA  cases, made attorneys receptive to taking these cases. In some states,  specifically Florida, where nearly 30 percent of all FLSA lawsuits were  filed from 1991 to 2012, several stakeholders, including federal judges,  WHD officials, and a defense attorney, told us that plaintiffs’ attorneys  advertise for wage and hour cases via billboards, radio, foreign language  press, and other methods. Two stakeholders we spoke with also said that  some plaintiffs’ attorneys, when consulted by potential clients about other  employment issues, such as wrongful termination, will inquire about  potential wage and hour claims; a plaintiffs’ attorney we interviewed also  said that it is generally easier to evaluate the potential merits of wage and  hour cases than of wrongful termination and employment discrimination  cases. While a few stakeholders said they did not view increased interest  among plaintiffs’ attorneys to be a significant factor in the increase in  FLSA lawsuits, most did, including some plaintiffs’ attorneys. Two  stakeholders, including an academic and a representative of an  organization that works on behalf of low wage workers, told us that this  increased interest was beneficial because it served to counterbalance  DOL’s limited FLSA enforcement capacity.
In addition, several stakeholders told us that evolving case law may have  contributed to the increased awareness and activity on the part of  plaintiffs’ attorneys. In particular, they mentioned the 1989 Supreme Court  decision Hoffmann–La Roche, Inc. v. Sperling, which held that federal  courts have discretion to facilitate notice to potential plaintiffs of ongoing  collective actions. Historically, according to several stakeholders, the  requirement that plaintiffs must “opt in” to a collective action had created  some challenges to forming collectives because the plaintiffs’ attorneys  had to identify potential plaintiffs and contact them to get them to join the  collective. Stakeholders we interviewed said the Hoffmann-La Roche  decision, which made it easier for plaintiffs’ attorneys to identify potential  plaintiffs, reduced the work necessary to form collectives. In addition,  according to several stakeholders we interviewed, case law in other areas  of employment litigation, such as employment discrimination, has  evolved, making FLSA cases relatively more attractive for plaintiffs’  attorneys who specialize in employment litigation and large multi-plaintiff  cases. For example, one attorney cited two Supreme Court decisions in  the late 1990s that made it more difficult for plaintiffs in employment- based sex discrimination lawsuits to prevail, and led plaintiffs’ attorneys to  consider other types of employment litigation such as FLSA cases.
Stakeholders also cited other factors that may have contributed to the  increase in FLSA litigation over the last two decades; however, these  factors were endorsed less consistently than the role played by plaintiffs’  attorneys. First, a number of stakeholders said that economic conditions,  such as the recent recession, may have played a role in the increase in  FLSA litigation. Workers who have been laid off face less risk when filing  FLSA lawsuits against former employers than workers who are still  employed and may fear retaliation as a result of filing lawsuits. In addition,  some stakeholders said that, during difficult economic times, employers  may be more likely to violate FLSA requirements in an effort to reduce  costs, possibly resulting in more FLSA litigation. Moreover, one judge we  interviewed noted that the recent recession has also been difficult for  attorneys and may be a factor in the types of lawsuits and clients they  choose to accept. In addition, ambiguity in applying the FLSA statute or  regulations—particularly the exemption for executive, administrative, and  professional workers—was cited as a factor by a number of stakeholders.  In 2004, DOL issued a final rule updating and revising its regulations in an  attempt to clarify these exemptions and provided guidance about the  changes, but a few stakeholders told us there is still significant confusion  among employers about which workers should be classified as exempt  under these categories. Finally, the potentially large number of wage  and hour violations was given as a possible reason for the increase in  FLSA litigation. Federal judges in New York and Florida attributed some  of the concentration of such litigation in their districts to the large number  of restaurants and other service industry jobs in which wage and hour  violations are more common than in some other industries. An academic  who focuses on labor and employment relations told us that centralization  in the management structure of businesses in retail, restaurant, and  similar industries has contributed to FLSA lawsuits in these industries  because frontline managers who were once exempt have become  nonexempt as their nonmanagerial duties have increased as a portion of  their overall duties. Service jobs, including those in the leisure and  hospitality industry, increased from 2000 to 2010, while most other  industries lost jobs during that period.
Many stakeholders also told us that the prevalence of FLSA litigation by  state is influenced by the variety of state wage and hour laws. For  example, while the federal statute of limitations for filing an FLSA claim is  2 years (3 years if the violation is “willful”), New York state law provides a  6-year statute of limitations for filing state wage and hour lawsuits. A  longer statute of limitations may increase potential financial damages in  cases because more pay periods are involved and because more workers  may be involved. Adding a New York state wage and hour claim to an  FLSA lawsuit in federal court may expand the potential damages, which,  according to several stakeholders, may influence decisions about where  and whether to file a lawsuit. In addition, according to multiple  stakeholders we interviewed, because Florida lacks a state overtime law,  those who wish to file a lawsuit seeking overtime compensation generally  must do so under the FLSA.
section_title: FLSA Lawsuits Filed in 2012 Were Concentrated in a Few Industries and Most Alleged Overtime Violations
paragraphs: Our review of a representative sample of FLSA lawsuits filed in federal  district court in fiscal year 2012 showed that approximately half were filed  against private sector employers in four industries. Almost all FLSA  lawsuits (97 percent) were filed against private sector employers. An  estimated 57 percent of the FLSA lawsuits filed in fiscal year 2012 were  filed against employers in four broad industry areas: accommodations  and food services; manufacturing; construction; and “other services”  which, in our sample, included services such as laundry services,  domestic work, and nail salons. Almost one-quarter of all lawsuits filed  (an estimated 23 percent) were filed by workers in the accommodations  and food service industry, which includes hotels, restaurants, and bars.  This concentration of lawsuits is consistent with what several  stakeholders, including DOL officials, told us about the large number of  FLSA violations in the restaurant industry. At the same time, almost 20  percent of FLSA lawsuits were filed by workers in the manufacturing  industry. In our sample, most of these lawsuits were filed by workers in  the automobile manufacturing industry in Alabama, and most were  individual lawsuits filed by workers who were originally part of one of two  collective actions that had been decertified. It is important to note that,  because of the presence of collective actions, the number of lawsuits filed  against an industry’s employers may understate the number of plaintiffs  involved in these suits.
FLSA lawsuits filed in fiscal year 2012 included a variety of alleged FLSA  violations in addition to at least one of the three types of claims— overtime, minimum wage, and retaliation—that each private FLSA lawsuit  must at minimum contain. Allegations of overtime violations were the  most common type among those explicitly stated in the documents we  reviewed (see fig. 3).  An estimated 95 percent of the FLSA lawsuits  filed in fiscal year 2012 alleged violations of the FLSA’s overtime  provision, which requires certain types of workers to be paid at one and a  half times their regular rate for any hours worked over 40 during a  workweek. Thirty-two percent of the FLSA lawsuits filed in fiscal year  2012 contained allegations that the worker or workers were not paid the  federal minimum wage, another main provision of the FLSA, while a  smaller percentage of lawsuits included allegations that the employer  unlawfully retaliated against workers (14 percent). In addition, the  majority of lawsuits contained other FLSA allegations, most often that the  employer failed to keep proper records of hours worked by the employees  (45 percent); failed to post or provide information about the FLSA, as  required (7 percent); or violated requirements pertaining to tipped workers  such as restaurant wait staff (6 percent).
We also identified more specific allegations about how workers claimed  their employers violated the FLSA. Nearly 30 percent of the FLSA  lawsuits filed in fiscal year 2012 contained allegations that workers were  required to work “off-the-clock” so that they would not need to be paid for  that time, and 16 percent alleged that workers were not paid appropriately  because they were employees who were misclassified as being exempt  from FLSA protections. In a similar proportion of cases (13 percent),  alleged overtime violations were claimed to be the result of the  miscalculation of the wage rate a worker was entitled to as overtime pay.  Such miscalculations could be the result, for example, of an employer not  factoring in bonuses paid to workers when determining their regular rate  of pay, which is used for the calculation of the overtime pay rate. Other  lawsuits included allegations that a worker was misclassified as an  independent contractor rather than an employee (4 percent). Independent  contractors are generally not covered by the FLSA, including its minimum  wage and overtime provisions.
In our review of FLSA lawsuits filed in fiscal year 2012, we found that a  majority of them were filed as individual actions, but collective actions  also composed a substantial proportion of these lawsuits. Collective  actions can serve to reduce the burden on courts and protect plaintiffs by  reducing costs for individuals and incentivizing attorneys to represent  workers in pursuit of claims under the law. They may also protect  employers from facing the burden of many individual lawsuits; however,  they can also be costly to employers because they may result in large  amounts of damages. We found that an estimated 58 percent of the FLSA  lawsuits filed in federal district court in fiscal year 2012 were filed  individually, and 40 percent were filed as collective actions. An estimated  16 percent of the FLSA lawsuits filed (about a quarter of all individually- filed lawsuits), however, were originally part of a collective action that was  decertified (see fig. 4). For example, 14 of the 15 lawsuits in our sample  filed in Alabama were filed by individuals who had been members of one  of two collectives that were decertified in fiscal year 2012.
section_title: WHD Plans Its FLSA Enforcement and Compliance Assistance Efforts Annually but Does Not Analyze Relevant Data to Improve Its Guidance
subsections: section_title: WHD Plans Its FLSA Enforcement Efforts Using an Annual, Data-Based Approach
paragraphs: Consistent with its stated mission of promoting and achieving compliance  with labor standards, WHD has an annual process for planning how it  targets its FLSA enforcement resources. Each year, WHD’s national  office plans the share of its enforcement resources that will be used for  targeted investigations versus responding to complaints it receives from  workers or their representatives about potential FLSA violations.
To plan the deployment of its resources for targeted investigations, WHD  identifies broad initiatives that focus on industries it determines have a  high likelihood of FLSA violations and where workers may be particularly  vulnerable. For example, WHD has targeted industries where workers  may be less likely to complain about violations or where the employment  relationship is splintered because of models such as franchising or  subcontracting. WHD’s regional and district offices then refine the list of  priority industries to develop plans that focus on the most pressing issues  in their areas. Each year, with input and ultimate approval from the  national office, WHD’s regional and district offices use these plans to  target their enforcement resources.
In developing their enforcement plans, WHD considers various inputs. For  example, WHD officials consider the nature and prevalence of FLSA  violations by using historical enforcement data to study trends in FLSA  complaints and investigation outcomes in particular areas. University- based researchers under contract with DOL have also used the agency’s  historical enforcement data to help it plan for and strategize its FLSA  enforcement efforts. In addition, WHD considers data from external  sources, such as reports from industry groups, advocacy organizations,  and academia. Although WHD’s national office is aware of significant  FLSA lawsuits through its monitoring of FLSA issues in court decisions,  WHD’s national, regional, and district offices do not analyze data on the  number of FLSA lawsuits filed or use the results of such analyses to  inform their enforcement plans. WHD officials noted that data on the  number of FLSA lawsuits filed may not provide an accurate or sensitive  gauge of FLSA violations because the number of workers involved and  the outcomes of these lawsuits are not readily available.
In developing their annual enforcement plans, WHD regional and district  offices identify approaches to achieving compliance given the industry  structure and the nature of the FLSA violations that they seek to address.  According to WHD internal guidance, strategic enforcement plans should  not only include targeted investigations of the firms that employ workers  potentially experiencing FLSA violations, but they should also contain  strategies to engage related stakeholders in preventing such violations.  For example, if a WHD office plans to investigate restaurants to identify  potential violations of the FLSA, it should also develop strategies to  engage restaurant trade associations about FLSA-related issues so that  these stakeholders can help bring about compliance in the industry.
section_title: In Its Compliance Assistance Efforts, WHD Does Not Analyze Data on Requests for Information on the FLSA in Planning How to Improve Its Guidance
paragraphs: Our prior reports and DOL’s planning and performance documents have  emphasized the need for WHD to help employers comply with the FLSA.  In documenting best practices about planning and performance  management, we have suggested that agencies “involve regulated  entities in the prevention aspect of performance.” In the case of WHD,  this best practice means helping employers voluntarily comply with the  FLSA, among other laws. Similarly, DOL’s planning and performance  documents have emphasized the importance of WHD promoting  “sustained and corporate-wide compliance among employers” as a  strategic priority. According to federal standards for internal control,  program managers need operational data to determine whether they are  meeting their agencies’ strategic and annual performance plans as well  as their goals for effective and efficient use of resources. In addition,  according to our guidance on the Government Performance and Results  Act of 1993 (GPRA), for planning and performance measures to be  effective, federal managers need to use performance information to  identify problems and look for solutions and approaches that improve  results.
WHD expects staff in its regional and district offices to play a key role in  delivering some forms of compliance assistance. For example, staff in the  district offices respond directly to employers’ questions about laws such  as the FLSA by providing informal guidance, most of which is offered over  the phone but is sometimes provided in writing when the guidance is  particularly technical. In addition, in each of WHD’s five regions, there are  three or more staff who specialize in community outreach and planning.  These specialists are involved in planning meetings and developing  outreach efforts and other forms of compliance assistance as part of the  annual, district-specific enforcement plans. Finally, WHD investigators in  the field are responsible for providing information and education to  employers during their enforcement actions.
At the national level, WHD publishes FLSA-related guidance including  notably its interpretive guidance, though this guidance is not informed by  systematic analysis of data on requests for assistance. To develop and  assess its interpretive guidance about the FLSA, WHD’s national office  considers input from its regional offices, but it does not have a data-based  approach that is informed by objective input, such as data on areas which  employers and workers have indicated the need for additional guidance.  Officials from WHD’s Office of Policy, which is responsible for publishing  interpretive guidance about the FLSA, told us they meet with WHD  regional and national office leadership weekly to discuss ongoing  initiatives and emerging issues. While WHD collects some data on the  inquiries it receives from the public via its call center, the Office of Policy  does not analyze these data to help guide its development of interpretive  guidance. According to WHD officials, the call center frequently refers  callers with technical questions to a WHD district office, but WHD does  not compile data on FLSA-related questions received by its district  offices. In addition, WHD does not use advisory panels to gather input  about areas of confusion that might be addressed with the help of  additional or clarified interpretive guidance on the FLSA. WHD officials  cited the administrative burdens associated with the Federal Advisory  Committee Act as a deterrent to using such panels to inform its guidance.
At the same time, despite the issuance of several FLSA-related fact  sheets, WHD’s publication of FLSA-related interpretive guidance has  declined in recent years. From 2001 to 2009, WHD published on its  website, on average, about 37 FLSA interpretive guidance documents  annually. However, in the last 3 years (2010 to 2012), WHD published  seven FLSA interpretive guidance documents. WHD officials cited  various reasons for this decline, including the resource-intensive nature of  developing the guidance; WHD’s finite resources; and other priorities,  such as promoting compliance with the Family and Medical Leave Act of  1993. In addition, WHD cited its issuance of several FLSA-related fact  sheets, which WHD posts separately from interpretive guidance on its  website. For example, in September 2013, WHD published several fact  sheets about domestic service employment under the FLSA, and, in July  2013, it revised a fact sheet about ownership of tips under the FLSA.  According to WHD officials, there is no backlog of requests for FLSA  interpretive guidance; however, WHD does not maintain a system for  tracking requests for such guidance.
Because WHD does not have a systematic approach for identifying areas  of confusion about the FLSA or assessing the guidance it has published,  WHD may not be providing the guidance that employers and workers  need. Of the nine wage and hour attorneys we interviewed, seven  indicated that more interpretive guidance on the FLSA would be helpful to  them. The attorneys cited determining whether workers qualify for  exemptions and calculating workers’ regular rate of pay for purposes of  overtime compensation as examples of FLSA topics on which more  guidance would be useful.
section_title: Conclusions
paragraphs: Some policymakers have raised questions about the effect that an  increasing number of FLSA lawsuits might have on employers’ finances  and their ability to hire workers or offer flexible work schedules and other  benefits, but it is difficult to isolate the effect of these lawsuits from the  effects of other influences such as changes in the economy. On the other  hand, the ability of workers to bring such suits is an integral part of FLSA  enforcement because WHD does not have the capacity to ensure that all  employers are in compliance with the FLSA. While there has been a  significant increase in FLSA lawsuits over the last decade, the reason for  this increase is difficult to determine: it could suggest that FLSA violations  have become more prevalent, that FLSA violations have been reported  and pursued more frequently than before, or a combination of the two.
Improved guidance from WHD might not affect the number of FLSA  lawsuits filed, but it could increase the efficiency and effectiveness of  WHD’s efforts to help employers voluntarily comply with the law. Without  a precise understanding of the areas of the law and related regulations  that are not clear to employers and workers, WHD may not be able to  improve the guidance and outreach it provides in the most appropriate or  efficient manner. A clearer picture of the needs of employers and workers  would allow WHD to more efficiently design and target its compliance  assistance efforts, which may, in turn, result in fewer FLSA violations.  Moreover, using data about the needs of employers and workers in  understanding the requirements of the FLSA would provide WHD greater  confidence that the guidance and outreach it provides to employers and  workers are having the maximum possible effect. Such data could, for  example, serve as a benchmark WHD could use to assess the impact of  its efforts.
section_title: Recommendation for Executive Action
paragraphs: To help inform its compliance assistance efforts, the Secretary of Labor  should direct the WHD Administrator to develop a systematic approach  for identifying areas of confusion about the requirements of the FLSA that  contribute to possible violations and improving the guidance it provides to  employers and workers in those areas. This approach could include  compiling and analyzing data on requests for guidance on issues related  to the FLSA, and gathering and using input from FLSA stakeholders or  other users of existing guidance through an advisory panel or other  means.
section_title: Agency Comments
paragraphs: We provided a draft of this report to DOL for review and comment. DOL's  WHD provided written comments, which are reproduced in appendix II.  WHD agreed with our recommendation that the agency develop a  systematic approach for identifying and considering areas of confusion  that contribute to possible FLSA violations to help inform the development  and assessment of its guidance. WHD stated that it is in the process of  developing systems to further analyze trends in communications received  from stakeholders such as workers and employers and will include  findings from this analysis as part of its process for developing new or  revised guidance. WHD also emphasized that it is difficult to determine  with sufficient certainty that any particular action contributed to the  described increase in FLSA lawsuits. In addition, WHD provided technical  comments, which we incorporated as appropriate.
We also provided a draft of this report to the Administrative Office of the  United States Courts and the Federal Judicial Center. These agencies  had no comments—technical or otherwise—on the report.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Secretary of Labor,  the Director of the Administrative Office of the United States Courts, and  the Director of the Federal Judicial Center. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-7215 or moranr@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix III.
section_title: Appendix I: Scope and Methodology
subsections: section_title: Analysis of the Number and Characteristics of FLSA Lawsuits
paragraphs: To describe what is known about trends in the number of lawsuits filed  under the Fair Labor Standards Act of 1938, as amended (FLSA), we  analyzed federal district court data provided by the Federal Judicial  Center. The data included case-specific information for all FLSA lawsuits  filed in federal district court during fiscal years 1991 through 2012. We  analyzed these data by year, circuit, state, and district. The Federal  Judicial Center also provided data on the number of civil lawsuits filed  during this time period, which we used to analyze the percentage of civil  cases that were FLSA cases. We did not review FLSA lawsuits filed in  state courts because data on these cases were not available in a  consistent way. To provide context about identified trends such as the  increase in FLSA lawsuits, we interviewed a range of FLSA stakeholders,  including Department of Labor (DOL) officials, attorneys who specialize in  wage and hour cases, federal district court and magistrate judges,  officials from organizations representing workers and employers, and  academics. To ensure balance, we interviewed both attorneys who  represent plaintiffs and those who represent defendants. We identified  some of these attorneys through organizations that represent workers,  such as labor unions and advocacy organizations such as the National  Employment Law Project, and industry organizations such as the National  Small Business Association. In selecting judges to interview, we chose  from districts with a significant increase in FLSA litigation in recent years  as well as districts that had not seen such increases to ensure a variety of  perspectives.
To provide information on selected characteristics of FLSA lawsuits filed,  we reviewed a nationally representative random sample of complaints  from FLSA lawsuits filed in federal district court during fiscal year 2012.  The sample of 97 complaints from FLSA lawsuits was drawn from the  case-specific FLSA lawsuit data provided by the Federal Judicial Center.  The filing date was determined by the “filing date” field, which records the  date a case was docketed in federal court. Cases that were initially filed in  federal court, cases removed from state court to federal court, cases  transferred from another federal court, and cases for which a new federal  docket was otherwise created during fiscal year 2012 (e.g., an individual  docket created in fiscal year 2012 after a previously filed collective action  was decertified) could be in our sample. We did not review cases from the  federal courts of appeals because data linking appeals to their  corresponding cases filed in district court were not readily available. All  estimates from our sample have a 95 percent confidence interval of within  plus or minus 10 percentage points. Because we followed a probability  procedure based on random selections, our sample is only one of a large  number of samples that we might have drawn. Since each sample could  have provided different estimates, we express our confidence in the  precision of our particular sample’s results as a 95 percent confidence  interval (e.g., plus or minus 10 percentage points). This is the interval that  would contain the actual population value for 95 percent of the samples  we could have drawn.
After the sample was drawn, we used the docket number associated with  each lawsuit in the sample to retrieve the complaint from the Public  Access to Court Electronic Records (PACER) database and review and  record information about the lawsuit. In cases where multiple complaints  were associated with a docket, such as amended complaints, we used  information from the first available complaint in the docket. We selected  this approach to ensure that we recorded information for each individual  case at approximately the same stage of litigation. We relied solely on  information that could be ascertained from the complaint; we did not do  additional research to confirm the accuracy of the information. With  respect to our analysis of the specific types of violations alleged in our  sample of complaints, our estimates include only those cases in which an  allegation was explicitly made in the complaint. It is possible that a larger  percent of FSLA litigation involved specific issues that were not alleged  explicitly in the complaint and instead were described more generically as  overtime or minimum wage violations. In addition, we did not review  subsequent documents filed in the case beyond the initial complaint.  Therefore, our review does not provide any information about how these  lawsuits were ultimately resolved. Information on the number of plaintiffs  taking part in a collective action was neither consistently available in the  complaints nor was it precise when it was available.
Our analysis with regard to the industries in which FLSA lawsuits are filed  is based on the number of FLSA lawsuits filed, not the number of plaintiffs  included in those lawsuits. A single collective action represents multiple  plaintiffs. Therefore, the number of FLSA lawsuits filed against employers  in a specific industry may not accurately reflect the number of workers or  relative frequency of workers claiming FLSA violations by industry.
The complaint from each lawsuit was reviewed by a GAO analyst and a  GAO attorney to identify the FLSA violation(s) it alleged and other  information, such as whether the lawsuit was a collective action, whether  there were associated allegations of state wage and hour law violations,  and the industry of the worker or workers who filed the lawsuit. In cases  in which the two reviewers recorded information about the lawsuit  differently, a discussion between them was held to resolve the difference.
We assessed the reliability of the data received from the Federal Judicial  Center by interviewing officials at the Administrative Office of the U.S.  Courts and the Federal Judicial Center and by reviewing documentation  related to the collection and processing of the data. In addition, we  conducted electronic testing to identify any missing data, outliers, and  obvious errors. We determined that certain data fields were not  sufficiently reliable, and therefore did not use them. For example, we  could not analyze data about judgments such as the amount of monetary  awards in FLSA lawsuits because, for a large percentage of the cases,  the information on the judgment was missing. We determined that the  data included in our report were sufficiently reliable for our purposes.
section_title: Analysis of WHD’s Planning Efforts
paragraphs: To describe how DOL’s Wage and Hour Division (WHD) plans its FLSA  enforcement and compliance assistance efforts, we reviewed the  agency’s planning and performance documents, as well as its published  guidance on the FLSA. In addition, we interviewed DOL officials in WHD’s  Office for Planning, Performance, Evaluation, and Communications;  Office of Policy; two regional WHD offices; and DOL’s Office of the  Solicitor about the agency’s enforcement and compliance assistance  activities. In addition, we asked the other stakeholders we interviewed  about their views of WHD’s enforcement and compliance assistance  efforts. To provide context throughout the report, we also reviewed  relevant federal laws and regulations. Finally, we compared WHD’s  planning process to internal control standards (see GAO, Standards for  Internal Control in The Federal Government, GAO/AIMD-00-21.3,  Washington, D.C.: November 1999) and best practices that we have  previously identified (see GAO, Managing for Results: Enhancing Agency  Use of Performance Information for Management Decision Making,  GAO-05-927, Washington, D.C.: Sept. 9, 2005; and Managing for  Results: Strengthening Regulatory Agencies’ Performance Management  Practices, GAO/GGD-00-10, Washington, D.C.: Oct. 28, 1999). We did  not assess WHD’s implementation of its enforcement and compliance  assistance plans.
We conducted this performance audit from November 2012 to December  2013 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of Labor
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Betty Ward-Zukerman (Assistant  Director), David Barish, James Bennett, Ed Bodine, David Chrisinger,  Sarah Cornetto, Justin Fisher, Joel Green, Ying Long, and Walter Vance  made significant contributions to this report. Also contributing to the report  were Jessica Botsford, Susanna Clark, Melinda Cordero, Ashley McCall,  Sheila McCoy, Drew Nelson, Catherine Roark, Sabrina Streagle, Anjali  Tekchandani, and Kimberly Walton.