In our testimony, we stated that the results of our undercover tests illustrated flaws in WHD’s responses to wage theft complaints, including delays in investigating complaints, failure to use all available enforcement tools, failure to follow up on employers who agreed to pay, an ineffective complaint intake process, and complaints not recorded in the WHD database. WHD successfully investigated 1 of our 10 fictitious cases, correctly identifying and investigating a business that had multiple complaints filed against it by our fictitious complainants. Our undercover tests revealed that WHD’s complaint intake process is time-consuming and confusing, potentially discouraging complainants from filing a complaint. Of the 115 phone calls we made directly to WHD field offices, 87 (76 percent) went directly to voicemail. While some offices have a policy of screening complainant calls using voicemail, other offices have staff who answer the phone, but may not able to respond to all incoming calls. In one case, WHD failed to respond to seven messages from our fictitious complainant, including four messages left in a single week. In other cases, WHD delayed over 2 weeks in responding to phone calls or failed to return phone calls from one of our fictitious employers. One of our complainants received conflicting information about how to file a complaint from two investigators in the same office, and one investigator provided misinformation about the statute of limitations in minimum wage cases. In one case, a WHD investigator lied to our undercover investigator about confirming the fictitious businesses’ sales volume with the Internal Revenue Service (IRS), and did not investigate our complaint any further. WHD management told us that their investigators do not have access to IRS databases, and WHD does not have the legal authority to obtain information about a business from IRS without the owner’s consent. WHD would be able to check employer- provided information against IRS records if the business owner signed an IRS consent form, however, WHD managers told us that they were unaware of this form and that investigators in the field do not use it. To hear selected audio clips of undercover calls illustrating poor customer service to our fictitious callers, refer to http://www.gao.gov/media/video/gao-09-458t/. Although all of our fictitious complaints alleged violations of laws that WHD enforces, 5 of our 10 complaints were not recorded in WHD’s database. These complaints were filed with four different field offices and included three complaints in which WHD performed no investigative work and two complaints in which WHD failed to record the investigative work performed. According to WHD policies, investigators should enter reasonable complaints into WHD’s database and either handle them immediately as conciliations or refer them to management for possible investigation. However, several of our undercover complaints were not recorded in the database, even after the employee had spoken to an investigator or filed a written complaint. In one of these cases, WHD failed to investigate a child labor complaint alleging that underage children were operating hazardous machinery and working during school hours, and did not record the complaint in its database. The number of complaints that are not entered into WHD’s database is unknown, but this problem is potentially significant. Similar to our 10 fictitious scenarios, in our testimony we identified 20 cases affecting at least 1,160 workers whose employers were inadequately investigated by WHD. We performed data mining on WHD’s database to identify 20 inadequate cases closed during fiscal year 2007. For several of these cases, WHD (1) did not respond to a complainant for over a year, (2) did not verify information provided by the employer, (3) did not fully investigate businesses with repeat violations, and (4) dropped cases because the employer did not return telephone calls. Five of the cases we investigated were closed based on unverified information provided by the employer. In each case, the information could have been verified by a search of public records, such as bankruptcy records, but the case files contain no evidence that the investigators attempted to perform these searches. WHD officials told us that investigators rely on internet searches to collect information about employers and generally do not have access to other publicly available or subscription databases. Examples include: In November 2005, WHD received a complaint alleging that a boarding school in Montana was not paying its employees proper overtime. Over 9 months after the complaint was received, the case was assigned to an investigator and conducted as an over the phone self-audit because, according to the investigator, WHD did not have the resources to conduct an on-site investigation. The employer agreed to pay over $200,000 in back wages to 93 employees, but WHD was subsequently unable to make contact with the business for over 5 months. In June 2007, one week before the 2-year statute of limitations on the entire back wage amount was to expire, the employer agreed to pay $1,000 of the $10,800 in wages due for which the statute of limitations had not yet expired. The investigator refused to accept the $1,000, and WHD recorded the back wages computed as over $10,800 rather than $200,000, greatly understating the true amount owed to employees. WHD determined that the firm had begun paying overtime correctly based on statements made by the employer but did not verify the statements through document review. No further investigative action was taken and the complainant was informed of the outcome of the case. In another case, the complainant alleged that the company employed 15- year-old children, failed to pay its employees minimum wage, and did not properly report income to IRS. The employer claimed that the company did not meet the income requirement to be covered under federal labor law but did not provide documentary evidence. When the employer failed to return WHD’s telephone calls or attend a conference with the investigator, WHD concluded the case. WHD’s complaint intake processes, conciliations, and other investigative tools are ineffective and often prevent WHD from responding to wage theft complaints in a timely and thorough manner, leaving thousands of low wage workers vulnerable to wage theft. As discussed above, our undercover tests showed that some WHD staff deterred callers from filing a complaint by encouraging employees to resolve the issue themselves, directing most calls to voicemail, not returning phone calls to both employees and employers, accepting only written complaints at some offices, and providing conflicting or misleading information about how to file a complaint. We also found that WHD does not have a consistent process for documenting and tracking complaints, resulting in situations where WHD investigators lose track of the complaints they have received. WHD’s conciliation process is ineffective because in many cases, if the employer does not immediately agree to pay, WHD does not investigate complaints further or compel payment. When an employer refuses to pay, investigators may recommend that the case be elevated to a full investigation, but several WHD District Directors and field staff told us WHD lacks the resources to conduct an investigation of every complaint and focuses resources on investigating complaints affecting large numbers of employees or resulting in large dollar amounts of back wage collections. WHD investigators are allowed to close conciliations when the employer denies the allegations, and WHD policy does not require that investigators review employer records in conciliations. In one case study, the employee stated that he thought the business was going bankrupt. As a result, WHD closed the case; however, we used a publicly available online database, Public Access to Court Electronic Records, to determine that the employer had never filed for bankruptcy. WHD management told us that the agency does not provide training on how to use public document searches and investigators do not have access to databases containing this information. In addition, WHD’s poor record-keeping makes WHD appear better at resolving conciliations than it actually is. For example, WHD’s southeast region, which handled 57 percent of conciliations recorded by WHD in fiscal year 2007, has a policy of not recording investigative work performed on unsuccessful conciliations in the database. WHD staff told us that if employers do not agree to pay back wages, cannot be located, or do not answer the telephone, the conciliation work performed will not be recorded in the database, making it appear as though these offices are able to resolve nearly all conciliations successfully. Inflated conciliation success rates are problematic for WHD management, which uses this information to determine the effectiveness of WHD’s investigative efforts. Without information on the outcomes of failed conciliations, WHD cannot identify employers showing a pattern of violations. Finally, we found WHD’s processes for handling investigations and other non-conciliations were frequently ineffective because of significant delays. For example, 5.2 percent of the investigations in our statistical sample were not initiated until over 6 months after the complaint was received, and 6.6 percent took more than one year to complete. See page 26 of appendix I for more information on the methodology of our sample. Timely completion of investigations by WHD is important because the statute of limitations for recovery of wages under the FLSA is 2 years from the date of the employer’s failure to pay the correct wages. FLSA, unlike some other laws, does not permit the suspension of the statute of limitations during a federal investigation. Specifically, this means that every day that WHD delays an investigation, the complainant’s risk of becoming ineligible to collect back wages increases. Labor has not sought additional authority to suspend the statute of limitations during an investigation, yet in several district offices, a large backlog prevents investigators from initiating cases within 6 months. One office we visited has a backlog of 7 to 8 months, while another office has a backlog of 13 months. Additionally, our analysis of WHD’s database shows that one district office did not initiate an investigation of 12 percent of complaints until over one year after the complaint was received, including a child labor complaint affecting over 50 minors. Once complaints were recorded in WHD’s database and assigned as a case to an investigator, they were often adequately investigated. One example of a successful investigation involved a complaint alleging that a firm was not paying proper overtime. The case was assigned to an investigator the same day it was filed in April 2007. The WHD investigator reviewed payroll records to determine that the firm owed the complainant back wages. The case was concluded within 3 months when the investigator obtained a copy of the complainant’s cashed check, proving that he had been paid his gross back wages of $184. In response to our testimony, the Secretary of Labor announced on March 25, 2009, that WHD would hire an additional 250 investigators to “reinvigorate the work of this important agency, which has suffered a loss of experienced personnel over the last several years.” Our work clearly shows that Labor has left thousands of actual victims of wage theft who sought federal government assistance with nowhere to turn. Our work has shown that when WHD adequately investigates and follows through on cases it is often successful. However, far too often many of America’s most vulnerable workers find themselves dealing with an agency concerned about resource limitations, with ineffective processes, without certain tools necessary to perform effective investigations, and unable to address all allegations of wage theft and other labor law violations within the 2-year statute of limitations. While an influx of new staff may help address some of these problems, without a careful assessment of WHD’s workload and processes, unscrupulous employers will continue taking advantage of our country’s low wage workers. Our work documented several cases in which the employees’ right to file a private lawsuit was constrained by WHD’s delays, resulting in hundreds of thousands of dollars of identified wage theft going uncollected. Therefore, Congress may wish to consider authorizing suspension of the statute of limitations while an investigation by WHD is ongoing. We recommend that the Secretary of Labor direct the Administrator of WHD to take the following five actions to improve processes for recording and responding to wage theft complaints: The Administrator should reassess current policies and processes and revise them as appropriate to better ensure that relevant case information is recorded in WHD’s database, including all complaints alleging applicable labor law violations regardless of whether the complaint was substantiated, and all investigative work performed on conciliations, regardless of whether the conciliation was successfully resolved. To provide assurance that WHD personnel interacting with complainants and employers appropriately capture and investigate allegations of labor law violations, and provide appropriate customer service, the Administrator should conduct an assessment of WHD’s complaint intake and resolution processes and revise them as appropriate. To improve the efficiency and effectiveness of WHD personnel handling wage theft complaints, the Administrator should explore providing more automated research tools to WHD personnel that would allow them to identify key information used in investigating complaints such as bankruptcy filings, annual sales estimates for businesses, and information on additional names and locations of businesses and individuals under investigation. To assist in the verification of information provided by employers under investigation, the Administrator should explore gaining access to information maintained by IRS and other agencies as needed through voluntary consent from businesses being investigated. To provide assurance that WHD has adequate human capital and resources available to investigate wage theft complaints, the Administrator should monitor the extent to which new investigators and existing staff are able to handle the volume of wage theft complaints, and if inadequate, what additional resources may be needed. We received written comments on a draft of this report from the Acting Assistant Secretary for Employment Standards (see appendix II). Labor concurred with our recommendations and provided additional clarifying information. Labor noted that unlike investigations, conciliations do not result in any determination of whether a violation occurred, but provide a chance to assist more employees than WHD could otherwise assist through more time-consuming investigations. Labor also stated that staff balance a variety of factors, including office workload, when determining whether to investigate a complaint, refer the employee to another organization or advise the employee of the right to file a private lawsuit. Labor provided additional representations on one of our undercover cases, an anonymous complaint alleging that children were operating heavy machinery and working during school hours in a meat packing plant. Because WHD had no record of this call, we reported that WHD had not investigated the complaint or recorded it in its database. In its written response to this report, Labor stated that our child labor complaint was reviewed by two WHD assistant district directors who determined that the complaint was bogus because the business address was a mailbox store and the company was not listed on several business websites. WHD did not call the business directly. Because no supporting documentation was provided for this representation, we could not confirm WHD’s account of investigative steps taken. See appendix II for more information. Labor also provided us technical corrections to the report which we incorporated, as appropriate. We have reprinted Labor’s written comments in their entirety in appendix II. As agreed with your office, unless you publicly release its contents earlier we plan no further distribution of this report until 30 days from the date of this letter. The report is available at no charge on the GAO Web site at http://www.gao.gov. If you have any questions concerning this report, please contact Gregory D. Kutz at (202) 512-6722 or kutzg@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 major contributions to this report are listed in appendix III. The missi of the Departmet of Labor’s Wagand Hor Disi (WHD) incldeforcing rovisins of the Fair Labor Sanrd Act, whch is designed to ensure tht mllns of worker re paid the federl minim wagand overtme. Ccting inveigans based o worker comain is WHD’s ory. According to WHD, inveigansange from comrehensive inveigans to coians, whch consis of hoe cll to comainan’s emloer. GAO found tht WHD freqtl respded inadequatel to comain, leing low wage workererable to wage theft. Posing asctus comainan, GAO fled 10 commo comainth WHD distrct offce cross the country. The undercover te reveled uggish respnse tme, oor comaininke rocess, and failed coia ttem, mong other rolems. Ie case, WHD inveigator led abinveigave work erformed and dot inveigate GAO’sctus comain. At the ed of the undercover te, GAO was ll waiing for WHD to gin inveigaing three cas— delay of rl , 4, and 2 moth, respectvely. The table elow rovde ddnal exale of inadequate WHD respns to GAO’sctus comains. The result of oundercover te llustrte fl in WHD’s respns to wage theft comain, incling delays in inveigaing comain, comain ot recorded in the WHD dabase, faire to usll aiable eforcemet tool ecause of ck of rerce, faire to follow up emloer who agreed to pay, an oor comaininke rocess. For exale, WHD failed to inveigate chld labor comainlleging thunderage chldre were oeringrdouschiner and workinging chool hos. I another case, WHD inveigator led to oundercover inveigator abt corming the fctus businsss’ sale volme wth the IternaRevenuServce (IRS), and dot inveigate or comainanyrther. WHD successll inveigated 1 of or 10 fctusas, correctl deying aninveigaing businss tht hd mltiple comainled againsbyr fctus comainans. Fve of or 10 comain were ot recorded in WHD’sabasand 2 of 10 were recorded as successll paid whe inct the fctus comainan reorted to WHD theot ee pai. To heelected auo clips of theundercover cll, o to http://www.ga.gov/media/vdeo/gao-09-48t/. Table 1 rovde summ of the 10 comain tht we fled or ttemted to fle wth WHD. Employee did not receive last paycheck. WHD did not return phone calls and failed to record our complaint in their database. WHD failed to return seven messages from our fictitious employee attempting to file a complaint. In two cases during regular business hours, calls were routed to a voicemail message stating that the office was closed. Complaint was never recorded in the database. Employee did not receive overtime for an average of 4 hours per week for 19 weeks. The WHD office’s large backlog prevented it from investigating our case in a timely manner. Investigator told our fictitious employee that it would take “8 to 10 months” to begin investigating his complaint. WHD failed to return four calls over 4 consecutive months from our fictitious employee attempting to determine the status of his complaint. Complaint was never recorded in the database. Employee was not paid minimum wage. WHD failed to record initial complaint and never returned calls from our fictitious employer. WHD investigator accepted the complaint but did not attempt to contact our fictitious employer to initiate a conciliation. Between September 24, 2008 and January 12, 2009, WHD failed to return four calls from our fictitious employee attempting to determine the status of his complaint. When the fictitious employee reached the same investigator, she had no record of his initial call and suggested the employee look for another job before filing a complaint against his employer. Investigator finally accepted the complaint and left a message for the fictitious employer, but did not return his two subsequent calls. Complaint was never recorded in the database. Employee did not receive last paycheck. WHD inaccurately recorded that our fictitious employee received back wages. Our fictitious employer told the WHD investigator he would pay, but failed to fax proof of payment to WHD as requested. WHD investigator never followed up to confirm payment and closed the case as “agreed to pay.” After 3 weeks, our fictitious employee called back and reported that he hadn’t been paid. The WHD investigator contacted our fictitious employer and, when asked, stated “there is no penalty” for failure to pay. After our fictitious employer refused to pay, WHD informed our fictitious employee of his right to take private action. Complaint was still recorded as “agreed to pay” in WHD’s database despite WHD’s knowledge that the fictitious employer had failed to pay the back wages. Employee was not paid minimum wage. Investigator lied to our fictitious employee about investigative work performed and did not investigate the complaint. Investigator told the fictitious employee that WHD had no jurisdiction because the gross revenues of the fictitious employer did not meet the minimum standard for coverage, even though the fictitious employee stated that his boss had told him the company’s gross revenues were three times greater than the minimum standard. Investigator claimed that he had obtained information on the fictitious employer’s revenue from an IRS database. However, our fictitious employer had never filed taxes, WHD officials told us they do not have access to IRS databases, and the case file shows that no contact was made with the IRS. We referred information related to this case to Labor’s Office of the Inspector General for further investigation. Employee was not paid minimum wage. WHD readily accepted our fictitious employer’s refusal to pay and stated they could not assist the fictitious employee further. WHD investigator accepted this complaint and promptly called our fictitious employer. Our fictitious employer agreed that she had failed to pay the minimum wage but refused to pay back wages due. WHD investigator accepted the refusal without question and informed our fictitious employee of his right to file a lawsuit. When our fictitious employee asked why WHD could not offer more help, the WHD investigator said she was “bound by the laws I’m able to enforce, the money the Congress gives us” and told our fictitious employee to contact his Congressman to request more resources for WHD. We deed numerous rolemth the WHD respnse to oundercover wage theft comains. Ke reas where WHD failed to tke approiate ct inclde delays in inveigaing comain, comain ot recorded in the WHD dabase, faire to usaiable eforcemet tool, faire to follow up emloer who agreed to pay, an oor comaininke rocess. Delay Invetigating Complaint. WHD took more than moth to gin inveigaingve of or fctus comain, incling three tht were ever inveigated. Ie case, the fctus comainanspoke to an inveigator who saihe wold coct the emloer. Ding the t 4 moth, the comainant left for messag asing abt the us of isas. Whe he reched the inveigator, he hd tke ct the comaint, dot recll spingth hand hot etered the comainin the WHD dabas. and chld labor re to or, bu revew of WHD record t the eof or work howed tht the case was ot inveigated or etered into WHD’sabas. I another case, an inveigator spoke to the fctus emloer, who refused to pay the comainant the back wag. The inveigator cloed the coiathot etering the casinform or otcome into WHD’sabas. This is consistet wth the WHD Stheast reginaol of ot recording the inveigave work erformed o unsuccessl coians. The effect of ot recording unsuccessl coians is to mke the coia successte for the reginal offce appetter than ctuall is. The nuer of comain thre ot etered into WHD’sabasis unow, but this rolem is oteiall signiansince t of or 10 gus comain were ot recorded in the dabas. Failure to Ue All Enforcement Tool. According to WHD ff, WHD lck the rerce to usll eforcemet tool in coians where the emloer refus to pay. According to WHD ol, whe an emloer refus to pay, the inveigator may recommed to WHD managemet tht the case elevted to ll inveigan. However, oe of or three fctus emloer who refused to payas ced under inveigan. Ie case, or fctus emloer refused to pay and the inveigator cceted this refusal wthot q, informing the comainant tht he cold fle te lsuit to recover the $262 de to h. Whe the comainanasked wh WHD coldn’rovde hm more assisance, the inveigator reed, “I’ve doe wht I can do, I’ve asked her to pay anhe can’t…I can’t wring lood from toe,” and the suggted the comainant coct his Cngressan to ask for more rerce for WHD to do ther work. According to WHD ol anintervewth ff, WHD doesn’t hve the rerce to coct an inveiga of ever comainanrefer to inveigate comain ffectingnuer of emloee or resulting ine dollmoun of back wags. Oe distrct drector told us tht coians result from “aiske” the part of the emloer and he doe ot lke his inveigator spingme o them. However, whe WHD cannot oain back wag in coia and decde ot to pusuan inveiga, the emloee’s recois to fle te ligan. Low wage workeray unable to fford ttory’s fee or may unlling to gue ther owasin ll clai cort, leing them wth o other ons to oain theback wags. inveigator told the emloer he was required to subroof of paymet, but oe of the inveigator followed up whe the emloer failed to rovde the required roof. The comainanin oth caster cocted the inveigator to reort he hot ee pai. The inveigator ttemted to otiate wth oth fctus emloer, but dot upte the case etr in WHD’sabase to inte tht the comainanever receved back wag, ming appas thougoth cas were successll reolved. Thee two casast doubt o whether comainan whoe coians re mrked “agreed to pay” in the WHD dabasctuall receved theback wags. businss. Or comainanin thisase told the inveigator tht his emloer hsale of $1.5ll in 2007, but the inveigator claimed tht he hd oained inform abt the businss from an IRSabashowing tht the fctus businssot meet the ross revenue threhold for coveragunder federl l. Or fctus businssot fled tax retns and WHD offia told us tht theinveigator do ot hve ccess to IRSabass. A revew of the case fle how thinform from the IRSas revewed by the inveigator. Iform relted to thisase was referred to Labor’s Offce of the Inspector Geerl for frther inveigan. WHD successll inveigated businss tht hd mltiple comainled againsbyr fctus comainans. WHD deed two pate coiansnging against the same fctus businss, oth originaing from comainled byr fctus comainans. Thee coians were combined into an inveiga, the correct rocedre for handling comain ffectingltiple emloees. The inveigator coinued the inveiga fter the fctus emloer claimed tht the businssd fled for bankruptc anttemted to visit the businss whe the emloer topped retning hoe clls. The inveigator dot uspubc record to ver tht the emloer hd fled for bankruptc, but otherwise mde reasnable effort to locte aninveigate the businss. rotectns of the Fair Labor Sanrd Act app to emloeengaged in interte commerce or in the rodct of ood for interte commerce. The ct app to ll emloee of anterise tht has t least $in annuasale or businss and has emloeengaged in interte commerce or in the rodct of ood for interte commerce, or tht has emloeeandling, elling, or otherwise working ood or mteria tht hve ee moved in or rodced for interte commerce by any ern. 29 U.S.C. §. Eve thouganterise mayve pate locns, is considered single eterise for the $00,000 coverage determina f relted ct re erformed througunied oer or commo cotrol by any er or erns for commo businss pu. reted in appix II. Table 2 rovde summ of 10 cas cloed by WHD etwee Octoer 1, 2006 anStemer 31, 2007. Type of alleged violation(s) Minimum Wage and Overtime (FLSA) Two former employees alleged that the firm was not paying minimum wage and overtime to employees. One WHD investigator visited establishment and took surveillance photographs but did not speak with the employer. Almost 2 months later, another WHD investigator visited the establishment and found that the employer had vacated the premises. A realty broker informed WHD that he believed the employer had closed, not relocated, causing WHD to close the case. Using public data, we confirmed that the employer was still active as of January 2009 and made contact with an employee of the firm who told us that the employer had moved from the location WHD visited. Overtime (FLSA) Fort Lauderdale, FL Complainant alleged he was due over $525 in overtime back wages, but commented to WHD that he thought his employer was filing for bankruptcy. WHD dropped the case stating that the employer declared bankruptcy. The employee was informed of his right to file a private lawsuit to recover back wages. WHD received a fax from this employer after the case had been concluded stating that the employee had been paid $245 in per diem, however the documentation did not support that the overtime back wages were paid; no further investigative action was taken. Bankruptcy court records show that the employer had not filed for bankruptcy and we confirmed that the employer was still in business in December 2008. (FLSA) Employee alleged she was owed minimum wage for 145 hours of work. Employer stated that wages were due by the previous owner, but did provide proof to substantiate or return subsequent telephone calls. WHD dropped the case and advised the employee of her right to file private litigation. Type of alleged violation(s) Minimum Wage (FLSA) WHD attempted to contact the employer two times over a period of 2 days to discuss allegations. Case was dropped when no one from the employer, which was a Sheriff’s office, returned WHD’s telephone calls. WHD informed the complainant that private litigation could be filed in order to recover back wages. Minimum Wage and Overtime(FLSA) Employer denied knowing employee and stated that the employee worked for a subcontractor, but refused to provide name of the company. WHD closed the case, recorded that the employer was in compliance with labor laws, and informed the individual who filed the complaint on behalf of the employee of his right to file a civil lawsuit. Employee filed a civil suit, during which the employer agreed he owed back wages. The court ruled that the employee was due $1,500, the same amount cited in the original complaint to WHD. Construction/ Anonymous Child Labor/ Minimum Wage (FLSA) The complainant alleged that the company employed 15 year old children, failed to pay its employees minimum wage, and did not properly report income to the Internal Revenue Service. The employer alleged that the company did not meet the income requirement to be covered under federal labor law, but did not provide documentary evidence. The employer failed to return WHD’s telephone calls or attend the site of the initial conference. WHD concluded this case with no further investigative action. Type of alleged violation(s) Minimum Wage and Overtime (FLSA) WHD attempted to set up a meeting with the company, but it was postponed so the owner could go deer hunting. Subsequent calls from WHD were not answered. Almost 8 months later, WHD conducted an announced site visit and closed the case, citing that the employer appeared to be out of business because no employees were on site during the visit and phone calls were unanswered. Public records show that the employer later signed and submitted an annual statement 2 months after the case was closed and we successfully contacted the employer in November 2008, who confirmed they were located at the same address visited by WHD. Boarding School / Teen Counselor (FLSA) Investigator assigned to case over 9 months after complaint was received. Complaint handled as a self audit, allowing the employer to review its own records for the alleged violations. WHD determined that the employer had begun paying correct overtime based on the employer’s verbal statements; no updated records were reviewed. The employer found that it owed over $200,000 to 93 employees, but delayed until the statute of limitations had almost expired before offering to pay a total of only $1,000 in back wages. WHD did not accept this amount, closed the case, and informed the complainant of the outcome. Type of alleged violation(s) Overtime (FLSA) Employer refused to comply with the law throughout WHD’s investigation and took months to produce payroll records. WHD determined that over $66,000 in back wages was due to 21 employees and stated in the case file that this estimate was “probably low.” The employer generally agreed with WHD’s findings and agreed to pay back wages, but then later refused to respond to WHD or change payroll practices. Over one year after the employer’s agreement to pay, WHD decided not to pursue litigation in part, because the case was considered “significantly old.” Employees were notified of their right to file private litigation in order to recover back wages. Child Labor/Minimum Wage/Overtime (FLSA) Case assigned to an investigator over 22 months after the complaint was received. WHD determined that the restaurant and related enterprises owed approximately $230,000 to 438 employees for minimum wage and overtime violations, and for depositing a percentage of employee tips into a business account. Employer agreed to pay back wages for minimum wage and overtime violations, but did not agree to pay back the collected tips. WHD did not accept partial back wage offer and closed the case with no collection of back wages. tht he dot eleve the frm hd relocted. A result, WHD cloed the inveigan. Using pubcl aiable inform, we found tht the businssas ctve as of Januaand locted ffereddress approxitel 3 mle ay from old locn. We cocted the fctor anspoke wth an emloee, who told us tht the businssd moved from the ddress WHD visited. CasS: I J 2007, WHD receved comaint from former correctns offcer who lleed th coun Sherff’s offce dot pay $766 ininim wag. The WHD inveigator assigned to work o thisase mde two cll to the Sherff’s offce over erod of 2 days. Two days fter the ecod cll, WHD dropped thisasecauso oe from the emloer hd reted the clls. WHD dot mke ddnal effort to coct the emloer or vte the llegans. WHD informed the comainant thte liga cold e fled in order to recover back wags. We successll cocted the Sherff’s offce in Novemer 2008. CasS 5: I May 2007, -roft communi worker ceter cocted WHD o ehlf of ayaborer lleging tht his emloer owed hm $1,00 for the revus three pay erods. WHD cocted the emloer, who ted tht the comainant was ctuall an emloee of subcotrctor, but refused to rovde the name of the subcotrctor. WHD cloed the case wthot verying the emloer’s teme aninformed the communi worker ceter of the emloee’sight to fle te ligan. WHD’sase fle inte tho volns were founand the emloer was in comiance wth appable labor ls. According to the Eecve Drector of the worker ceter, approxitel 2 weekter, WHD cocted hand claimed tht the emloer in the comaint hagreed to pay the back wags. Whe the emloer dot pay, the comainansued the emloer in ll clai cort. Ding the coe of the lsuit the emloer dmtted tht he owed the emloee back wags. The cort rled tht the emloer owed the emloee $1,00 for unpaid wag, the same mounin the original comaint to WHD. llow the emloer under inveiga to coct ther ow revew of record and clcte the back wage to emloees. overtme back wag for ho worked etwee Stemer 2004 and June 2005. WHD determined tht the frm gan paying overtme correctl in June 2006 based o temede by the emloer, but dot ver the teme through docmet revew. After the emloer’s ttor iniiall inted tht the wold agree to pay the over $200,000 in back wag, WHD was unable to mke coct wth the businss for over moths. WHD record inte tht the inveigator eleved tht the frm was trying to fin loo hole to vopaying back wags. I June 2007, oe week efore the 2-te of lns the ere back wagmount was to expire, the emloer agreed to pay $1,000 ot of the $10,800 tht hot et expired. The inveigator refused to ccet the $1,000 saying tht wold hve ee “ke ettling the cas.” WHD recorded the back wag computed as over $10,800 rther than $200,000, retl undering the trmount owed to emloees. WHD oted in the case fle tht the frm refused to pay the more than $10,800 in back wag, but dot recommeassssing nalt ecause the felt the frm was ot ret offeder and there were o chld labor volns. No frther inveigave ctaske and the comainant was informed of the otcome of the cas. CasS: I June 2003 and erl, WHD receved comain against two reauan owed by the same eteris. Oe comainlleed tht emloee were working “off the clock” anerver were ing forced to give 2. ercet of ther tips to the emloer. The other comainlleed off the clock work, llegal dedctns, and minim wage volns. Thisase was ot assigned to an inveigator unl May, over 22 moth fter the 2003 comaint was receved. The WHD inveigator assigned to thisasted tht the delay in the casassignmet was ecause of backlo t the Nashvlle Distrct Offce tht has since ee reolved. WHD cocted ll inveiga and found tht 438 emloee were dapproxitel $230,000 in back wag for minim wagand overtme volns and the required tip ool. Although tip ool re ot llegal, WHD determined tht the emloer’sip ool was llegaecause the company desited the mo into businss ccoun. Frther, the frm volted chld labor l by llowing inor under 16 old to work more than 3 ho chool days. The emloer disagreed tht the tip ool was llegaanted th revus WHD inveigator hd told hm tht was cceable. The emloer agreed to pay back wage for the minim wagand overtme volns, buot the wag tht were collected for the tip ool. WHD informed the emloer thpartiaback wag wold ot cceted and thisase was cloed. Iformddnal casan e founin appix II. WHD’s comaininke rocess, coians, and other inveigave tool re ineffectve and ofte revet WHD from resping to wage theft comain in mel and thorough manner, leing thousan of low wage workererable to wage theft. Specll, we found tht WHD ofteai to record comain in abasan oor comaint- inke rocess oteialliscoag emloee from fing comains. For exale, of or 10 undercover wage theft comain subtted to WHD were ever recorded in the dabase, incling comainlleging thunderage chldre were oeringrdouschinering chool hos. WHD’s coia rocess is ineffectve ecausinanyas, f the emloer doe ot mmediatel agree to pay, WHD doe ot inveigate comainrther or comel payme. I dd, WHD’s oor record-keepingke WHD appetter t reolving coians than ctuall is. For exale, WHD’s theast regi, whch handled ercet of coians recorded by the ag inisr 2007, has ol of ot recording unsuccessl coians in the WHD dabas. Finall, we found WHD’s rocess for handling inveigans and other -coians were freqtl ineffectve ecause of signiant delays. Oce comain were recorded in WHD’sabasanassigned as ase to an inveigator, the were ofte dequatel inveigated. comainan ttemt to fle comainbure discoaged by WHD’s comaininke rocess and eveuall give up. Rgarding WHD’s record-keepingaire, we found tht WHD doe ot hve consisterocess for docmeing and trcking comains. Thisas resulted in siuans where WHD inveigator loe trck of the comain theve receved. According to WHD ol, inveigator hold eter comain into WHD’sabasand ether handle them mmediatel as coians or refer them to managemet for ssible inveigan. However, everl of oundercover comain were ot recorded in the dabase, eve fter the emloee hspoke to an inveigator or fled wrtte comain. This is partrl troubing in the case of or chld labor comaint, ecaust rais the ssibi tht WHD is ot recording or inveigaing comain cocerning the well- ing ansafet of the mot verable emloees. Emloeeay eleve tht WHD is inveigaing ther case, whe inct the inform the rovded over the hoe or eve in wringas ever recorded. Since there is o record of thee cas in WHD’sabase, is ssible to kow how many comain re reorted buever inveigated. According to everl WHD Distrct Drector, in coians where the emloer refus to pay, ther offceck the rerce to inveigate frther or comel paymet, cotribuing to the faire we deed inundercover te, cas, anissale. Whe an emloer refus to pay, inveigatoray recommed tht the case elevted to ll inveiga, bueverl WHD Distrct Drector and feld ff told us WHD lck the rerce to coct an inveiga of ever comainand focus rerce inveigaing comain ffectingnuer of emloee or resulting ine dollmoun of back wage collectns. Ccting ll inveiga llow WHD to de other volns or other ffected emloee, ttemt to otiate back wagpaymet wth the emloer and, f the emloer coinu to refuse, refer the case to the Soltor’s Offce for ligan. However, in ome coians, the emloer is able to vopaying back wag si by refusing. Whle WHD inform comainan of ther right to fle suiagainst ther emloer to recover back wag, is unkel tht mot low wage workerve the means to hre an ttor, leing them wth lttle recoe to oain theback wags. comainis assigned to an inveigator, ant least oe offce llow inveigator 10 days to reolve coians, whch may ot llow tme for ddnal follow-up work to erformed. WHD ff ine feld offce told us the re lted to three unanswered telehoe cll to the emloer efore the re required to dro the casandvise the comainant of hisight to fle suit to recover back wags. Sff in everl feld offce told us tht the re ot ermtted to mke site visi to emloer for coians. WHD inveigator re llowed to dro coians whe the emloer deni the llegans and WHD ol doe ot require thinveigator revew emloer record in coians. Ie cas, the emloee ted tht he thought the businssas ing bankrup. WHD dropped the casing tht the emloer declred bankruptc aninformed the emloee of hisight to fle te lsuit to recover back wags. Bankruptc cort record how tht the emloer hot fled for bankruptc, and we cormed tht the emloer was ll in businss in Decemer 2008. Oe WHD inveigator told us this ot ecessa to ver bankruptc record ecause coians re dropped whe the emloer refus to pay, regardless of the reas for the refusa. Oundercover te anintervewth feld ff deed erus record-keeping fl in whch mke WHD appetter t reolving coians than ctuall is. For exale, WHD’s theast regi, whch handled ercet of coians recorded by WHD inisr 2007, has ol of ot recording inveigave work erformed o unsuccessl coians in the dabas. WHD ff told us thf emloer do ot agree to pay back wag, cannot e locted, or do ot answer the telehoe, the coia work erformed wll ot e recorded in the dabas, ming appas though thee offce re able to reolve rl ll coians successlly. Iflted coia successte re rolemc for WHD managemet, whch us this inform to determine the effectvess of WHD’s inveigave efforts. ome offceth this ol, the comaint tht the coiaas based o wold e recorded in WHD’sabas. However, the comaint wold appas thougt hever ee inveigated, ecause the inveigave work and the otcome of the coia wold ot e recorded in the dabas. Other offce do ot eter the comaininto the dabas. iniiall agree to pay in coia but reis romise, WHD inveigatorot change the otcome of the cloed casin WHISARD to how tht the emloee dot receve back wags. Whle ome inveigatorait for roof of paymeefore closing the coia, other told us tht the cloe coians as oo as the emloer agree to pay. Eve f the emloee lter tell the inveigator tht he has ot ee paid, inveigator told us the do ot change the otcome of cloed casin the WHD dabas. WHD pubcl reort the totback wag collected and the nuer of emloee receing back wag, but theis re overted ecausan unow nuer of coians recorded as successll reolved in the WHD dabase dot ctuall result in the comainant receing the back wag. Theoor record-keeping ctce rere signiant l of the pu we used to elect oissale ecause the nuer of coians ctuall erformed by WHD cannot e determined and coians recorded as successll reolved may ot hve resulted in back wag for the emloees. A result, the erceage of inadequate coians iskeligher than the faire rte eted insale. We found th5.erce of coians insale were inadequatel coiated ecause WHD failed to ver the emloer’s claim tho vol occrred, cloed the casfter the emloer dot ret hoe cll, or cloed the casfter the emloer refused to pay back wags. However, we found tht many of the coians recorded in WHD’sabase were dequatel inveigated. Oe exale of successl coia involved comainlleging thrm was ot payinginim wag. The comaint was assigned to an inveigator the same day t wasled in Stemer 2007. The WHD inveigator cocted the ower, who dmtted the vol anagreed to pay back wag of $1,. The case was coclded the same day whe the inveigator oained copy of the comainan’s check from the emloer anspoke to the comainant, corming tht he was able to cash the check and hd receved his back wags. robabi rocedre based oandom electns, osale ise of nuer of sale tht we might hve drn. Since ech sale cold hve rovded dfferet ete, we expressr codece in the recisi of opartsale’s result as ercet codece intervl (e.g., us or minus erceagin). This is the intervl tht wold coain the ctuapue for 9 ercet of the sale we cold hve drn. The 9 ercet codece intervsurrouningsale of inadequate inveigansang from 206 to 1,19aire in the pun. We found WHD’s rocess for handling inveigans and other - coiansas freqtl ineffectve ecause of signiant delays. However, oce comain were recorded in WHD’sabasanassigned as ase to an inveigator, the were ofte successll inveigated. Almot 19 erce of -coians insale were inadequatel inveigated, inclingas tht were ot iniiated unl more than 6 moth fter the comaint was receved, cas cloed fter an emloer refused to pay, and cas tht took over or to comlete. I dd, eveasailed two of or tes. Reason why non-conciliation was inadequate Cases not initiated within 6 months of complaint Case closed due to employer’s refusal to pay Cases with violations found that were not referred to Labor’s Office of the Solicitor for litigation Cases taking more than one year to complete Cases where WHD failed to review employer records Six of the cas insale failed ecause the were ot iniiated unl over 6 moth fter the comaint was receved. According to WHD offia, -coians hold iniiated wthin 6 moth of the dte the comainisled. Tmel comlet of inveigans by WHD is ortanecause the te of lns for recover of wag under the FLSA is from the dte of the emloer’saire to pay the robabi rocedre based oandom electns, osale ise of nuer of sale tht we might hve drn. Since ech sale cold hve rovded dfferet ete, we expressr codece in the recisi of opartsale’s result as ercet codece intervl (e.g., us or minus erceagin). This is the intervl tht wold coain the ctuapue for 9 ercet of the sale we cold hve drn. The 9 ercet codece intervsurrouningsale of inadequate inveigansang from 2, to ,827 faire in the pun. correct wags. Specll, this means tht everay tht WHD delays an inveiga, the comainan’sisk of ecoming ineligible to collect back wag increass. Ie of osale cas, WHD letter to comainant 6 moth fter his overtme comaint wasled ing tht, ecause of backlo, cteekeis ehlf. The letter reqted tht the comainaninform WHD wthinbusinssays of whether he inteded to tke te ctn. The case fle how in tht the comainant respded to WHD. Oe moth lter, WHD assigned the comaint to an inveigator ant the comainananother letter ing thf he dot respd wthinssays, the case wold e cloed. WHD cloed the case o the same day the letter was . Or casisussed above anin appix II inclde exale of comain ot inveigated for over r, cas cloed based o unvered inform rovded by the emloer, businssth ret volns tht were ot fll inveigated, and cas dropped ecause the emloer dot ret telehoe clls. For exale, ine cas, WHD found tht 21 emloee were dt least $66,000 in back wag for overtme volns. Throughot the inveiga, the emloer was uncooerve and resisted roving payroll record to WHD. At the ed of the inveiga, the frm agreed wth WHD’sinings anromised to pay back wag, but the topped resping to WHD. The emloee were ever paiback wag and over r lter, the Soltor’s Offce decded ot to pusue liga or any other ct in part ecause the case was considered “signiantl old.” The te of lns for recover of wag under FLSA and the Dis Bco Act is from the emloer’saire to pay the correct wags. 29 U.S.C. §55. For wllfl volns, in whch the emloer kew ctns were llegal or cted reckless in determining the lega of ctns, the te of lns iss. Federl cortve eforced the te of lns eve f Labor is inveigaing comain. Shandelman v. Schuman, 92 F. Supp. 334 (E.D.Pa.0). unl over ofter the comaint was receved, incling chld abor comainffecting over 0 minors. Because the e of lns to collect back wag under FLSA is, WHD is ing comainan t risk of collecting frct of the back wag the wold hve ee able to collect t the tme of the comain. WHD o failed to comel record and other inform from emloers. Whle WHD Rginal Administrtor re legall able to issusubpoenas, WHD has ot eteded this abi to inuainveigator, who therefore ded o emloer to rovde record and other docme voluny. Ias where pubc record re aiable to ver emloer teme, WHD inveigator do ot hve certain tool tht wold fte ccess to thee docmes. For exale, we used pubcl-aiable oine dabase, Pubc Access to Crt ElectroniRecord (PACER), to determine than emloer who claimed to hve fled for bankruptcot ctuall do. However, there is o evdece in the case fle tht the WHD inveigator erformed this check. WHD offia told us th inveigator do ot receve training how to uspubc docmerche and do ot hve ccess to dabas coaining this inform such as PACER. We found tht, oce comain were recorded in WHD’sabasanassigned as ase to an inveigator in melanner, the were ofte successll inveigated. Aisussed above, WHD doe ot record ll comain in abasand discoag emloee from fing comain, ome of whch may signiant labor volns suiable for inveigan. I dd, manyas re delayed moth efore WHD iniiate an inveigan. However, osale deed manyas tht were dequatel inveigated oce the were assigned to an inveigator. Specll, 81.ercet of the -coians insale were dequatel inveigated. Oe exale of successinveiga involved comainlleging thrm was ot paying roer overtme was assigned to an inveigator the same day t wasled in Al 2007. The WHD inveigator revewed payroll record to determine tht the frm owed the comainanback wags. The case was coclded wthin 3 moth whe the inveigator oained copy of the comainan’sashed check, roving tht he hee paid his ross back wag of $184. workerind themelve deingth an ag cocered abt rerce ns, wth ineffectve rocess, and wthot certain tool ecessa to erform tmel and effectve inveigans of wage theft comains. Ufortunatel, fr too ofte the result is unscrupulous emloering dvanage of or country’s low wage workers. Mr. Cairman and Memer of the Commttee, this cocldeteme. We wold leased to answer anyns th or other memer of the commttee mayve t thisme. For frther inform abt this temony, lease coct Greor D. Ktz t (202) 12-6722 or ktz@ga.gov or Jonathan Meer t (214) 777- 766 or meer@ga.gov. Iuaing ke cotribuns to this temony inclded Er Ael, Christoher Bckle, Carl Brde, Sfee Cagie, Ranll Cole, Merto Hll, Jennifer Hffman, Bba Lewis, Jeffer McDermott, Adrew McItoh, Sandr Moore, Adrew O’Cnnell, Gloria Pro, Rert Roder, Ramo Rodriguez, Si Schwrtz, K Self, and Daniel Silva. Cct in for or Offce of CngressinaRelns and Pubc Affaiay e found o the laspage of this temony. To revew the effectvess of WHD’s comaininke and coia rocess, GAO inveigator ttemted to fle 11 comain abt 10 fctus businss to WHD distrct offce in Bltmore, Man; Brmingm, Alabaa; Dllas, Texas; Mia, Flora; San Joe, Cafornia; and WeCovina, Cafornia. Thee feld offceandle 13 ercet of ll cas inveigated by WHD. The comain we fled wth WHD inclded minim wage, laspaycheck, overtme, and chld labor volns. GAO inveigatorained undercover ddress anhonuer to as oth comainan and emloer in thecenas. A part of or overll assssmet of the effectvess of inveigans cocted by WHD, we oained ananazed WHD’s Wagand Hor Iveigave Support anRorting Dabase (WHISARD), whch coained 32,323 cas coclded etwee Octoer 1, 2006 anStemer 30, 2007. We anazed WHD’s WHISARD dabasand determined t was sufftl reliable for pu of oauaninveigave work. We anazed andom robabi sale of 11 coians and 11 - coians to cotribute to or overll assssmet of whether WHD’s rocess for inveigaing comain re effectve. Because we followed robabi rocedre based oandom electns, osale re oe of nuer of sale tht we might hve drn. Since ech sale cold hve rovded dfferet ete, we expressr codece in the recisi of the partsale’s result as ercet codece intervl (e.g., us or minus erceagin). This is the intervl tht wold coain the ctuapue for 9 ercet of the sale we cold hve drn. To determine whether an inveigaas inadequate, we revewed case fle and cormed detai of elected casth the inveigator or techniian assigned to the cas. Isale te, coians were determined to inadequate f WHD dot successll iniiate inveigave work wthin 3 moth or dot comlete inveigave work wthin 6 moths. No-coians were determined to inadequate f WHD dot successll iniiate inveigave work wthin 6 moth, dot comlete inveigave work wthinr or dot refer cas in whch the emloer refused to pay to Labor’s Offce of the Soltor. Both coians an-coians were determined to inadequate f WHD dot coct the emloer, dot correctl determine coveragunder federl lw, dot revew emloer record, or dot compute anassss back wag whe approiate. coctinglk-throug of inveigave rocessth managemeanintervewing WHD offias. We gathered inform abt distrct offce ol aninual cas by cocting site visi t the Mia and Tpa, Floristrct offce, and cocting telehointervewth techniians, inveigator and distrct drector in 23 feld offce and hedquarter offia in Wasingto, D.C. We spoke wth Labor’s Offce of the Soltor in Dllas, Texas and Wasingto, D.C. To decro-level d WHD comain, we anazed d for cas cloed etwee Octoer 1, 2006 anStemer 30, 2007 by regi, distrct offce and case otcome. To deas of inadequate WHD respns to comain, we d-mined WHISARD to de cloed cas in whch signiant delay occrred in resping to comaint (casing more than 6 moth to iniiate or 1 r to comlete), an emloer cold ot e locted, or the case was dropped whe an emloer refused to pay. We oained ananazed WHD case fle, intervewed WHD offia, and revewed pubcl aiable d from oine dabas and the Departmet of Treasuy’s FinaniaCme Eforcemet Network to gather ddnainform abt thee cass. We intervewed comainan who cocted GAO drectl or were referred to us byabor dvoc roups to gather inform abt WHD’s inveiga of ther comains. Table rovde summ of te ddnal cas of inadequate Wagand Hor Disi (WHD) inveigans. Thee cas inclde insance where WHD dropped cas fter (1) emloer refused to cooerte wth an inveiga, (2) WHD deed ol but failed to force emloer to pay emloee ther owed wag, and (3) an emloer lleed t was bankrupt whe inct the emloer was ot. Minimum Wage (FLSA) Complainant alleged he was not paid minimum wage. WHD attempted to contact the employer to substantiate the claim, but the employer did not return WHD’s calls. Case was closed and the employee was informed of his right to file private litigation. We were able to make contact with the employer in February 2009. Minimum Wage (FLSA) Employer would not make a commitment to WHD to pay $937 in back wages. WHD closed the case and recorded that the employer was in compliance with labor laws. Minimum Wage (FLSA) Employer admitted owing wages but refused to pay because the employee had been involved in a vehicular accident in a company vehicle. WHD requested that employer comply with labor laws in the future, but employer refused. The WHD investigator stated that the case was closed and the employee was informed of his right to file a private lawsuit. Failure to Overtime (FLSA) Employer admitted to WHD that employees were not paid overtime and he did not know how much they were paid per hour. One employee told the investigator that the employees had been threatened and another source informed the investigator that the employer had threatened employees with a machete so they would lie during WHD interviews, but the investigator still determined that the employer’s violations did not appear to ase was rected inveiga into the businss based o ip receved from comettor, ot the comaint of single worker. The Govermet Accounabi Offce, the aut, evua, aninveigave rm of Cngress, exis to support Cngress in meeting consnal respnsibi and to hel rove the erformance anccounabi of the federovermet for the Ameran eole. GAO exain the use of pubc funs; evuate federro anols; anrovde anays, recommens, and other assisance to hel Cngresske informed oversight, ol, and funing decisins. GAO’s commtmet to ood overmeis reflected in core v of ccounabi, inte, and reliabiy. The fasteand easit way to oain copi of GAO docme o cois through GAO’s We site (www.ga.gov). Ech weekday fteroo, GAO We site ewl released reort, temony, and correspdece. To hve GAO e-mai ist of ewl ted rodct, o to www.ga.gov anelect “E-mail Utes.” The ce of ech GAO pub reflect GAO’s ctual cot of rodct and distribu and de the nuer of pag in the pub and whether the pub is inted in color or ck and whte. Pring and ordering inform is ted o GAO’s We site, http://www.ga.gov/ordering.htm. Plce order bylling (202) 12-6000, toll free (866) 801-7077, or TDD (202) 12-2. Orderay paid for using Ameran Express, Discover Card, MasterCard, Visa, check, or mo order. Call for ddnainformn. In addition to the contacts named above, individuals making key In addition to the contacts named above, individuals making key contributions to this report included Erika Axelson, Christopher Backley, contributions to this report included Erika Axelson, Christopher Backley, Carl Barden, Shafee Carnegie, Randall Cole, Merton Hill, Jennifer Carl Barden, Shafee Carnegie, Randall Cole, Merton Hill, Jennifer Huffman, Barbara Lewis, Jeffery McDermott, Andrew McIntosh, Sandra Huffman, Barbara Lewis, Jeffery McDermott, Andrew McIntosh, Sandra Moore, Andrew O’Connell, Gloria Proa, Robert Rodgers, Ramon Moore, Andrew O’Connell, Gloria Proa, Robert Rodgers, Ramon Rodriguez, Sidney Schwartz, Kira Self, and Daniel Silva. Rodriguez, Sidney Schwartz, Kira Self, and Daniel Silva.

Summary: The mission of the Department of Labor's Wage and Hour Division (WHD) includes enforcing provisions of the Fair Labor Standards Act (FLSA), which is designed to ensure that millions of workers are paid the federal minimum wage and overtime. Conducting investigations based on worker complaints is WHD's priority. On March 25, 2009, GAO testified on its findings related to (1) undercover tests of WHD's complaint intake process, (2) case study examples of inadequate WHD responses to wage complaints, and (3) the effectiveness of WHD's complaint intake process, conciliations (phone calls to the employer), and other investigative tools. To test WHD's complaint intake process, GAO posed as complainants and employers in 10 different scenarios. To provide case study examples and assess effectiveness of complaint investigations, GAO used data mining and statistical sampling of closed case data for fiscal year 2007. This report summarizes the testimony (GAO-09-458T) and provides recommendations. GAO found that WHD frequently responded inadequately to complaints, leaving low wage workers vulnerable to wage theft and other labor law violations. Posing as fictitious complainants, GAO filed 10 common complaints with WHD district offices across the country. These tests found that WHD staff deterred fictitious callers from filing a complaint by encouraging employees to resolve the issue themselves, directing most calls to voicemail, not returning phone calls to both employees and employers, and providing conflicting or misleading information about how to file a complaint. An assessment of complaint intake processes would help ensure that WHD staff provide appropriate customer service. To hear clips of undercover calls illustrating poor customer service, see http://www.gao.gov/media/video/gao-09-458t/ . According to WHD policies, investigators should enter all reasonable complaints into WHD's database. However, even though all of GAO's fictitious complaints alleged violations of the laws that WHD enforces, 5 of 10 complaints were not recorded in WHD's database. In addition, WHD policy in one region instructs staff not to record the investigative work done on small cases in which the employer refuses to pay, making WHD appear better at resolving these cases than it is. Reassessing its processes for recording complaints would help WHD ensure that all case information is available. Similar to the 10 fictitious scenarios, GAO identified 20 cases affecting at least 1,160 real employees whose complaints were inadequately investigated by WHD. Five of the cases were closed based on false information provided by the employer that could have been verified by a search of public records, such as bankruptcy records, but WHD investigators do not have access to publicly available or subscription databases. In another case, the employer claimed that the company did not meet the income requirement to be covered under federal law but did not provide documentary evidence. WHD investigators do not have access to income information collected by the Internal Revenue Service and were unable to verify the employer's claim. Obtaining more research tools and implementing information sharing processes with other agencies would assist WHD in verifying employer-provided information. GAO's overall assessment found ineffective complaint intake and investigation processes. WHD officials often told GAO that WHD lacks the resources to conduct an investigation of every complaint, allowing employers in some small cases to avoid paying back wages simply by refusing to pay. GAO found that WHD's investigations were often delayed by months or years. Monitoring the extent to which WHD staff are able to handle the volume of complaints would provide assurance that WHD has sufficient resources available. Under FLSA, the statute of limitations is 2 years from the date of the violation, meaning that every day that WHD delays an investigation, the complainant's risk of becoming ineligible to collect back wages increases. However, in several offices, backlogs prevent investigators from initiating cases within 6 months. Suspending the statute of limitations during a WHD investigation would prevent employees from losing back wages due to delays.