FLSA is the federal law regulating minimum wage and overtime, as well as child labor, in the United States. WHD of the Employment Standards Administration (ESA) enforces this law through workplace inspections of employer payroll records. In the garment industry, WHD typically targets workplaces for inspection based on complaints received from workers and other sources, as well as case referrals from local, state, and other federal government agencies. Depending on the violation, WHD may assess civil monetary penalties or use injunctions and other legal actions to deter noncompliance and recover back wages owed by employers. An additional tool is FLSA’s “hot goods” provision, which prohibits the production and sale of goods produced in violation of the minimum wage and overtime provisions of FLSA. The Secretary of Labor can enforce this provision by seeking injunctions stopping the employer from producing, transporting, delivering, and selling goods until employer compliance is achieved. WHD is also responsible for monitoring employer compliance with the employment verification requirements of the Immigration and Nationality Act, as amended by the Immigration Reform and Control Act of 1986. Many states also have legislation that supplements federal laws and regulations governing the payment of minimum and overtime wages, as well as the use of child labor. In addition, states generally require most employers to maintain workers’ compensation insurance and to pay unemployment insurance and other state taxes. Some states require the registration of employers in particular industries, like garment manufacturing. The garment industry, one of the largest manufacturing industries in the United States, is dominated by less than 1,000 manufacturers who parcel out production to about 20,000 contractors and subcontractors, all of whom enter and exit the industry easily. Analysts have long identified the labor-intensive U.S. garment industry as one characterized by extreme price competition, low wages, an immigrant workforce, and a vulnerability to sweatshop working conditions. A typical garment manufacturer often has production orders with smaller contracting or subcontracting shops. These contractors may be responsible for such operations as cutting, sewing, or completely assembling the garment. The finished work is either returned to the manufacturer or shipped directly to the retailer (see fig. 1). On the basis of expert opinion, garment industry sweatshop operations appear to have increased since 1989. Experts we spoke with, however, could not provide nationwide data on the number of sweatshops because of the underground nature of these workplaces. In three of the garment centers included in our study, federal, state, and local labor law officials; academics; employers; and representatives of union and community groups generally believe that garment sweatshops have increased since 1989. The one exception was New York City, where the Chief of the New York Apparel Industry Task Force reported that, while sweatshops remained a widespread and serious problem, the severity of the 1990-91 recession had forced many shops into bankruptcy, significantly shrinking both the number of sweatshop and nonsweatshop garment operations in the city. On the other hand, WHD officials in New York City believe the problem of sweatshops in the garment industry remains the same as in 1989. In 1989, GAO reported that 4,500 of the 7,000 garment shops in New York City were sweatshops; in 1994, one expert estimates that 2,000 of the 6,000 garments shops in New York City are sweatshops. Other estimates of garment sweatshops that experts provided were 50 of 180 (El Paso); 4,500 of 5,00 (Los Angeles); and 400 of 500 (Miami). Many of the experts we spoke with believe that sweatshop working conditions in the garment industry continue to be poor or have worsened in recent years. While accompanying federal and state labor law investigators in Los Angeles and in New York City on raids of garment sweatshops, we found deplorable working conditions (see figs. 2 and 3). Some of the citations for violations that federal or state officials issued included exposed electrical wiring, blocked aisles, unguarded machinery, and unsanitary bathrooms. Some experts also described the working conditions in a typical garment shop as including poor lighting, temperature control, and ventilation as well as blocked aisles. In Miami, we found the working conditions in garment shops, while still poor, to be less severe than in New York and Los Angeles. Labor officials in New York and Los Angeles believe the large number and severity of minimum wage and overtime violations may be related, in part, to the larger population of undocumented immigrant workers for garment manufacturing. In contrast, Labor officials in Miami and El Paso believe that because the workforce primarily comprises U.S. citizens and documented immigrants, there are fewer minimum wage and overtime violations. The Miami officials reported serious problems with workers’ sewing garments in their homes (industrial homework) while officials in El Paso reported a growing problem with industrial homework. Experts believe that many characteristics of sweatshop operations, including their size, ownership, and workforce composition, have not changed significantly since 1989. Garment shops remain small in size (generally 5 to 50 workers) and operate with mostly a female immigrant workforce that is primarily Latin American with Asians in some areas. However, some experts have reported a recent influx of male workers in sweatshops in Los Angeles and El Paso. Experts believe legislative, resource, and economic factors have contributed to the continued presence and growth of sweatshops in the garment industry. For example, legislatively, FLSA does not include any civil monetary penalties for recordkeeping violations. Federal and state labor law officials stated that records maintained by the employer on the workers’ pay and hours of work are essential to assess whether the employer is in violation of the act’s minimum wages and overtime provisions. In addition, the statute of limitations governing FLSA back-wage cases can adversely affect WHD’s ability to collect all wages owed to workers. Federal and state labor law officials in New York City and Los Angeles identified another legislative weakness with FLSA’s hot goods provision. Under current law, WHD must obtain a court injunction permitting enforcement of the act through the confiscation of goods produced in violation of FLSA. This can be a time-consuming process, permitting the contractor to ship the illegal goods in the interim. To obtain an injunction, WHD must demonstrate in court that the contractor’s violation of the act was willful—essentially, that the contractor knowingly and recklessly disregarded the law. WHD officials state that this is difficult to prove even in some cases with flagrant and repeated violations. Regarding resource factors, since 1989, WHD has had fewer enforcement resources for all of its regulatory objectives and more employers to cover and laws to enforce. In addition, WHD has experienced a 17 percent (970 to 804) decrease in the number of investigators, while the number of estimated employers covered by FLSA increased by over 6 percent (see table 1). In addition, combating sweatshops in the garment industry is only one of WHD’s many regulatory priorities, which also include protecting farm workers, working children, and workers in low-wage industries. Finally, WHD’s regulatory mission was recently expanded, giving the agency enforcement responsibilities for the Family and Medical Leave Act and the Employee Polygraph Protection Act. Regarding economic factors, many of the experts we spoke with said that the intense price-competitive dynamics of the garment industry have fostered a willingness among manufacturers and contractors to break labor laws. The low domestic start-up costs allow easy contractor entry, ensuring manufacturers a large number of contractors bidding against each other for work. This competition is further heightened by the ability of retailers and manufacturers to import low-priced garments and the typical presence of an immigrant and primarily undocumented workforce, often with limited employment opportunities. WHD has made some progress in coordinating enforcement activities in garment industry sweatshops, but problems remain. Labor’s efforts are impeded because of legal and administrative limitations and the varying regulatory priorities of federal and state labor departments. WHD has a joint agreement with OSHA, which enforces compliance with standards promulgated under federal health and safety legislation, to cross train investigators and refer cases. OSHA and WHD compliance officers receive at least 3 days of instruction annually on each agency’s operations, and WHD and OSHA refer cases on both formal and informal bases. Although experts identify garment industry sweatshops as dangerous workplaces, OSHA currently does not target garment shops for programmed health or safety inspections. This is because the Bureau of Labor Statistics (BLS) industry-level injury data used by OSHA for targeting does not identify the garment industry as a high hazard industry. Thus, OSHA has chosen to rely on an employee complaint or a reported injury, which limits the potential number of referrals it makes to WHD. WHD has a joint agreement with the INS to cross train investigators and refer cases. WHD and INS compliance staff periodically participate in joint training sessions. WHD investigators currently verify the employment eligibility status of workers when inspecting a worksite for FLSA violations and provide information on the results of these inspections to INS. Although WHD officials report receiving some case referrals from INS, they rarely refer cases to INS. This is because WHD officials believe that greater cooperation with INS would actually impede their own enforcement efforts by undermining worker cooperation in WHD investigations. In a recent report, we found that employers who do not pay federal taxes may also be violating labor laws. Currently, WHD has no agreement with the IRS to cross train investigators or to refer cases. However, IRS is starting to develop its enforcement efforts around certain market segments, particularly types of taxpayers or businesses. Although WHD officials say that they do refer some cases to IRS, they also report receiving little information in return. This is because the IRS Code generally limits sharing information with federal agencies for enforcement purposes. Federal agencies can get very limited information, such as company addresses, when cases involve assessed penalties. However, many WHD cases do not involve such penalties.