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.