[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
  GAO'S UNDERCOVER INVESTIGATION: WAGE THEFT OF AMERICA'S VULNERABLE 
                                WORKERS 

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                          EDUCATION AND LABOR

                     U.S. House of Representatives

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 25, 2009

                               __________

                           Serial No. 111-11

                               __________

      Printed for the use of the Committee on Education and Labor


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                    COMMITTEE ON EDUCATION AND LABOR

                  GEORGE MILLER, California, Chairman

Dale E. Kildee, Michigan, Vice       Howard P. ``Buck'' McKeon, 
    Chairman                             California,
Donald M. Payne, New Jersey            Senior Republican Member
Robert E. Andrews, New Jersey        Thomas E. Petri, Wisconsin
Robert C. ``Bobby'' Scott, Virginia  Peter Hoekstra, Michigan
Lynn C. Woolsey, California          Michael N. Castle, Delaware
Ruben Hinojosa, Texas                Mark E. Souder, Indiana
Carolyn McCarthy, New York           Vernon J. Ehlers, Michigan
John F. Tierney, Massachusetts       Judy Biggert, Illinois
Dennis J. Kucinich, Ohio             Todd Russell Platts, Pennsylvania
David Wu, Oregon                     Joe Wilson, South Carolina
Rush D. Holt, New Jersey             John Kline, Minnesota
Susan A. Davis, California           Cathy McMorris Rodgers, Washington
Raul M. Grijalva, Arizona            Tom Price, Georgia
Timothy H. Bishop, New York          Rob Bishop, Utah
Joe Sestak, Pennsylvania             Brett Guthrie, Kentucky
David Loebsack, Iowa                 Bill Cassidy, Louisiana
Mazie Hirono, Hawaii                 Tom McClintock, California
Jason Altmire, Pennsylvania          Duncan Hunter, California
Phil Hare, Illinois                  David P. Roe, Tennessee
Yvette D. Clarke, New York           Glenn Thompson, Pennsylvania
Joe Courtney, Connecticut
Carol Shea-Porter, New Hampshire
Marcia L. Fudge, Ohio
Jared Polis, Colorado
Paul Tonko, New York
Pedro R. Pierluisi, Puerto Rico
Gregorio Kilili Camacho Sablan,
    Northern Mariana Islands
Dina Titus, Nevada
[Vacant]

                     Mark Zuckerman, Staff Director
                Sally Stroup, Republican Staff Director






















                            C O N T E N T S

                              ----------                              
                                                                   Page

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

Statement of Members:
    McKeon, Hon. Howard P. ``Buck,'' Senior Republican Member, 
      Committee on Education and Labor...........................     4
        Prepared statement of....................................     5
    Miller, Hon. George, Chairman, Committee on Education and 
      Labor......................................................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Kutz, Greg, Managing Director, U.S. Government Accountability 
      Office, Washington, DC; accompanied by Jonathan Meyer, 
      Assistant Director, U.S. Government Accountability Office, 
      Dallas, TX.................................................     8
        Prepared statement of....................................    11


                  GAO'S UNDERCOVER INVESTIGATION: WAGE
                 THEFT OF AMERICA'S VULNERABLE WORKERS

                              ----------                              


                       Wednesday, March 25, 2009

                     U.S. House of Representatives

                    Committee on Education and Labor

                             Washington, DC

                              ----------                              

    The committee met, pursuant to call, at 10:03 a.m., in room 
2175, Rayburn House Office Building, Hon. George Miller 
[chairman of the committee] presiding.
    Present: Representatives Miller, Kildee, Payne, Woolsey, 
Hinojosa, McCarthy, Tierney, Kucinich, Hare, Courtney, Shea-
Porter, Sablan, Titus, McKeon, Petri, Price, and Roe.
    Staff present: Aaron Albright, Press Secretary; Tylease 
Alli, Hearing Clerk; Jordan Barab, Senior Labor Policy Advisor; 
Chris Brown, Labor Policy Advisor; Jody Calemine, Labor Policy 
Deputy Director; Nina DeJong, Investigative Associate; Lynn 
Dondis, Senior Policy Advisor, Subcommittee on Workforce 
Protections; Carlos Fenwick, Policy Advisor, Subcommittee on 
Health, Employment, Labor and Pensions; Patrick Findlay, 
Investigative Counsel; David Hartzler, Systems Administrator; 
Ryan Holden, Senior Investigator, Oversight; Stephanie Moore, 
General Counsel; Alex Nock, Deputy Staff Director; Joe Novotny, 
Chief Clerk; Rachel Racusen, Communications Director; Dray 
Thorne, Senior Systems Administrator; Michael Zola, Chief 
Investigative Counsel, Oversight; Mark Zuckerman, Staff 
Director; Andrew Blasko, Minority Speech Writer and 
Communications Advisor; Robert Borden, Minority General 
Counsel; Cameron Coursen, Minority Assistant Communications 
Director; Ed Gilroy, Minority Director of Workforce Policy; Rob 
Gregg, Minority Senior Legislative Assistant; Richard Hoar, 
Minority Professional Staff Member; Alexa Marrero, Minority 
Communications Director; Jim Paretti, Minority Workforce Policy 
Counsel; Molly McLaughlin Salmi, Minority Deputy Director of 
Workforce Policy; and Linda Stevens, Minority Chief Clerk/
Assistant to the General Counsel.
    Chairman Miller [presiding]. Good morning. A quorum being 
present, this oversight hearing on the Committee of Education 
and Labor, ``The GAO Undercover Investigation: Wage Theft of 
America's Vulnerable Workers,'' will now come to order.
    And pursuant to rule 7(c), any member may submit an opening 
statement in writing, which will be made part of the permanent 
record.
    And the Chair now recognizes himself for the purposes of 
making an opening statement, and then I will recognize Mr. 
McKeon, the senior Republican on the Committee.
    The Committee on Education and Labor meets this morning to 
examine the results of a Government Accountability Office 
undercover investigation last year into practices of the Wage 
and Hour Division of the Department of Labor.
    In our first hearing on wage theft in July, we learned that 
millions of workers were robbed of their hard-earned wages 
every day. GAO testified that the very agency tasked to fight 
wage theft had failed to effectively investigate and properly 
track the number of cases involved in our nation's minimum 
wage, overtime, and child labor laws.
    In fact, GAO cited 15 case studies that showed the failure 
of the agencies to fully investigate and properly address 
violations of the law. Hundreds of cases were found where the 
agency did not assign an investigator for more than a year 
after the initial complaint. Delays effectively deny justice 
because of the 2-year statute of limitations on wage theft.
    As a result of their initial investigation, the GAO 
concluded that thousands of complaints handled by the Wage and 
House Division were likely mishandled over the past decade. 
These failures likely resulted in workers receiving little or 
no restitution at all from their employers.
    In light of these initial findings, the Committee asked the 
GAO to continue its investigation and dig deeper to see whether 
highlighted cases were isolated or a symptom of a larger 
problem throughout the agency.
    This morning, the GAO reports back to the Committee on what 
they learned during their undercover investigation.
    From today's testimony, it is clear that there are serious 
problems with the Wage and Hour Division's ability to 
effectively enforce the law. The agency has dropped the ball in 
far too many cases in pursuing employers that cheat their 
workers out of their hard-earned wages.
    Some Wage and Hour employees explicitly discouraged GAO 
undercover investigators posing as workers from filing the 
complaints. Other complaints went unanswered. Anonymous tips of 
children illegally operating dangerous machinery did not get 
investigated at all.
    Not only was this allegation never investigated, but the 
complaint did not appear in the agency's computers that are 
used to track cases. Dropping the ball in child labor 
complaints could be potentially deadly.
    I wish this was not an isolated incident. The GAO found 
time and again complaints were routinely brushed aside, 
improperly tracked, or inadequately investigated.
    I am concerned about the pattern of inaction in properly 
addressing thousands of cases involving overtime, minimum wage, 
and child labor violations, because these violations of the law 
are not trivial.
    Those most vulnerable to wage theft are likely bearing the 
brunt of our nation's economic crisis. Families where a 
breadwinner has his or her wages stolen still have rent to pay, 
mouths to feed, children to clothe, and medicine to buy. They 
can't afford to be paid less than what the law says.
    Simply put, when a business pockets wages due its workers, 
it is theft, and it is illegal. Today's testimony will help 
inform Congress and the new leadership in the Department of 
Labor on whether additional resources, better training, or 
improved statutory language are needed.
    We owe it to all hard-working Americans to ensure that the 
Federal Government lives up to its responsibility to guarantee 
that families are not being cheated out of their wages by 
unscrupulous employers.
    Ultimately, I believe that improving the Wage and Hour 
Division will come down to strong leadership and a renewed 
commitment to enforce the law. I believe that that was lacking 
in the past administration. I believe that the previous 
Secretary of Labor was essentially absent without leave with 
regard to the enforcement of the laws on behalf of the safety 
of workers and the wages of workers.
    I am confident that the Obama administration and Secretary 
Solis are committed to turning this egregious record around and 
ensuring that all workers are treated fairly by their employers 
and their government.
    And I would like now to yield to Mr. McKeon for his opening 
statement.
    [The statement of Mr. Miller follows:]

   Prepared Statement of Hon. George Miller, Chairman, Committee on 
                          Education and Labor

    The Committee on Education and Labor meets this morning to examine 
the results of a Government Accountability Office undercover 
investigation last year into practices of the Wage and Hour Division of 
the Department of Labor.
    In our first hearing on wage theft in July, we learned that 
millions of workers are robbed of their hard earned wages every year.
    GAO testified that the very agency tasked to fight wage theft had 
failed to effectively investigate and properly track a number of cases 
involving our nation's minimum wage, overtime, and child labor laws.
    In fact, GAO cited 15 case studies that showed the failures of the 
agency to fully investigate and properly address violations of the law.
    Hundreds of cases were found where the agency did not assign an 
investigator for more than a year after the initial complaint. Delays 
effectively deny justice because of the two year statute of limitations 
on wage theft.
    As a result of their initial investigation, the GAO concluded that 
thousands of complaints handled by the Wage and House Division were 
likely mishandled over the past decade. These failures likely resulted 
in workers receiving little or no restitution at all from their 
employer.
    In light of these initial findings, the Committee asked the GAO to 
continue its investigation and dig deeper to see whether the 
highlighted cases were isolated or a symptom of a larger problem 
throughout the agency.
    This morning, the GAO reports back to the Committee on what they 
learned during their undercover investigation.
    From today's testimony, it is clear that there are serious problems 
with the Wage and Hour Division's ability to effectively enforce the 
law. The agency has dropped the ball in far too many cases in pursuing 
employers that cheat their workers out of their hard earned wages.
    Some Wage and Hour employees explicitly discouraged GAO undercover 
investigators posing as workers from filing complaints. Other 
complaints went unanswered.
    Anonymous tips of children illegally operating dangerous machinery 
did not get investigated at all. Not only was this allegation never 
investigated, but the complaint did not appear in the agency computers 
that are used to track cases. Dropping the ball in child labor 
complaints could be potentially deadly.
    I wish this was an isolated incident.
    The GAO found that time and again, complaints were routinely 
brushed aside, improperly tracked, or inadequately investigated.
    I am concerned about the pattern of inaction in properly addressing 
thousands of cases involving overtime, minimum wage, and child labor 
violations. Because these violations of the law are not trivial.
    Those most vulnerable to wage theft are likely bearing the brunt of 
our nation's economic crisis. Families where a breadwinner has his or 
her wages stolen still have rent to pay, mouths to feed, children to 
clothe, and medicine to buy. They can't afford to be paid less than 
what the law says.
    Simply put, when a business pockets wages due to its workers, it is 
theft. And it is illegal.
    Today's testimony will help inform Congress and the new leadership 
of Department of Labor on whether additional resources, better training 
or improved statutory language are needed.
    We owe it to all hard working Americans to ensure that the Federal 
Government lives up to its responsibility to guarantee that families 
are not being cheated out of their wages by unscrupulous employers.
    Ultimately, I believe that improving the Wage and Hour Division 
will come down to strong leadership and a renewed commitment to enforce 
the law.
    I am confident that the Obama administration and Secretary Solis 
are committed to turning this egregious record around and ensuring that 
all workers are treated fairly by their employers and their government.
                                 ______
                                 
    Mr. McKeon. Thank you, Chairman Miller, and good morning.
    Today's hearing is about work and pay. It is the energy 
that drives the American dream. Republicans have long believed 
in the value and dignity of work and the rewards that come from 
it.
    Take welfare reform. Back in the 1990s, Republicans pushed 
to change a system that for decades gave money to people for 
not working. Today, welfare recipients earn their benefits by 
working or training for a new job or taking classes to get the 
skills they need to join the workforce later.
    They are no longer dependent on the government. Instead, 
government becomes dependent on them as recipients eventually 
earn a living on their own and pay taxes.
    And many years later, I am happy to report that bipartisan 
welfare reform is still working. From 1996 to 2006, the 
Heritage Foundation says the number of people receiving welfare 
dropped by nearly 60 percent.
    For these and all American workers, we have a duty to 
ensure that federal workplace laws are enforced, and that 
brings us to the subject of today's hearing, wage theft.
    Mr. Chairman, I am not sure this is the best language to 
discuss the whole range of issues that need our attention in 
this area. The allegations we are examining are not always 
theft as we know it. The U.S. Department of Labor's Wage and 
Hour Division is responsible for enforcing a whole host of 
workplace laws.
    For instance, we will hear today about alleged violations 
of child labor laws. This isn't a question of so-called wage 
theft, but it is an equally important concern.
    Rather than using politically charged language, I think we 
should ease the rhetoric and focus on the serious issues at 
hand. And with the seriousness of these issues, I can't help 
but notice that no one from the Labor Department is testifying 
today. That is too bad.
    Mr. Chairman, I respectfully submit that, in addition to 
the expert testimony we will hear from the GAO, it would have 
been helpful to have a representative from the department here 
with us today. A Labor Department expert could have brought a 
different perspective to the problems of so-called wage theft.
    We have been told that a lack of political appointees 
within the administration precludes the Department of Labor 
from testifying today. I certainly appreciate the fact that the 
department--indeed, the entire administration--is still in 
transition. However, that does not explain why career civil 
servants at the department, many of whom have spent decades 
enforcing these laws, could not have testified today and 
offered their thoughts.
    At a minimum, one of these long-term officials with 
responsibility for enforcement of our wage and hour laws might 
have offered an explanation for dereliction of duty, alleged by 
the GAO. More importantly, that expert could have offered 
possible solutions to the problem.
    At our urging, I understand that the majority requested 
that a Department of Labor official testify here today. I am 
told the department declined.
    I am not sure how persistent we were in pressing the 
department on this point, Mr. Chairman, but personally I don't 
think we should have taken ``no'' for an answer. If we are 
serious about enforcing the law and not just scoring political 
points, we should insist on bringing the individuals who are 
responsible for investigating wage and hour violations here to 
account for their actions.
    That said, the GAO has done extensive work in this area. I 
am sure there are things we can learn from this investigation, 
and I welcome Mr. Kutz of the GAO--back to the Committee once 
again.
    Thank you, Chairman Miller. I yield back.
    [The statement of Mr. McKeon follows:]

Prepared Statement of Hon. Howard P. ``Buck'' McKeon, Senior Republican 
                Member, Committee on Education and Labor

    Thank you, Chairman Miller and good morning.
    Today's hearing is about work and pay. It's the engine that drives 
the American Dream.
    Republicans have long believed in the value and dignity of work, 
and the rewards that come from it.
    Take welfare reform. Back in the 1990s, Republicans pushed to 
change a system that--for decades--gave money to people for not 
working.
    Today, welfare recipients earn their benefits by working. Or 
training for a new job. Or taking classes to get the skills they need 
to join the workforce later.
    They are no longer dependent on the government. Instead, government 
becomes dependent on them as recipients eventually earn a living on 
their own and pay taxes.
    And, many years later, I'm happy to report that bipartisan welfare 
reform is still working. From 1996 to 2006, The Heritage Foundation 
says the number of people receiving welfare dropped by nearly 60 
percent.
    For these and all American workers, we have a duty to ensure that 
federal workplace laws are enforced. And that brings us to the subject 
of today's hearing--``wage theft.''
    Mr. Chairman, I'm not sure this is the best language to discuss the 
whole range of issues that need our attention in this area. The 
allegations we're examining are not always ``theft'' as we know it.
    The U.S. Department of Labor's Wage and Hour Division is 
responsible for enforcing a whole host of workplace laws.
    For instance, we'll hear today about alleged violations of child 
labor laws. This isn't a question of so-called ``wage theft.'' But it's 
an equally important concern.
    Rather than using politically-charged language, I think we should 
ease the rhetoric and focus on the serious issues at hand.
    And with the seriousness of these issues, I can't help but notice 
that no one from the Labor Department is testifying today.
    That's too bad.
    Mr. Chairman, I respectfully submit that--in addition to the expert 
testimony we will hear from the GAO--it would have been helpful to have 
someone from the department here with us today.
    A Labor Department expert could have brought a different 
perspective to the problems of so-called ``wage theft.''
    We have been told that a lack of political appointees within the 
Administration precludes the Department of Labor from testifying today. 
I certainly appreciate the fact that the Department--indeed, the entire 
Administration--is still in transition. However, that does not explain 
why career civil servants at the Department--many of whom have spent 
decades enforcing these laws--could not have testified today and 
offered their thoughts.
    At a minimum, one of these long-time officials with responsibility 
for enforcement of our wage-and-hour laws might have offered an 
explanation for dereliction of duty alleged by the GAO.
    More importantly, that expert could have offered possible solutions 
to this problem.
    At our urging, I understand that the majority requested that a 
Department of Labor official testify here today. I'm told the 
Department declined. I'm not sure how persistent we were in pressing 
the Department on this point, Mr. Chairman. But personally, I don't 
think we should have taken ``no'' for an answer.
    If we're serious about enforcing the law--and not just scoring 
political points--we should insist on bringing the individuals who are 
responsible for investigating wage-and-hour violations here to account 
for their actions.
    That said, the GAO has done extensive work in this area. I'm sure 
there are things we can learn from its investigation, and I welcome Mr. 
Kutz of the GAO back to the Committee once again.
    Thank you, Chairman Miller. I yield back.
                                 ______
                                 
    Chairman Miller. Thank you.
    The chair would just respond that it is--as it has been 
since I have become chair of the Committee, the GAO will 
testify on its findings and we will ask the Department of 
Labor, and we will be asking the Department of Labor, the new 
Department of Labor, what they will be doing and their 
recommendations to follow up on this, because I think, at the 
end of the day, we are going to see that the laws are 
inadequate and fail to protect the very people whose wages are 
being stolen.
    I do not think that wage theft is a too severe term. A 
conscious decision, as you will see in the record, has been 
made to deny these people the wages that they are entitled to 
under the law.
    You are stealing--it may only be a dollar an hour or a few 
dollars an hour, but what you will see is it adds up to very 
serious money for thousands and millions of workers in this 
country who do not get the benefit of the wages that they 
signed up to earn for the work that they, in fact, do.
    There are not a lot of allegations that these people didn't 
do the job. They did the job. They weren't paid at the 
conclusion of the job on either the legal rate or the agreed 
rate by their employer. And so we have a long ways to go here 
yet.
    Mr. McKeon. Mr. Chairman, may I respond?
    Chairman Miller. Sure.
    Mr. McKeon. I agree with you totally. That is why I say 
that we should have someone here from the Department of Labor 
because----
    Chairman Miller. With all due respect----
    Mr. McKeon [continuing]. They should be held to account for 
that.
    Chairman Miller. With all due respect, we had people here 
from the Department of Labor before, and it was fairly 
pathetic, in terms of their inability to provide the data. So 
we will give the new Department a chance to get up and running. 
We expect them to come and to respond to this and to help us 
develop a solution to it.
    Mr. McKeon. Again, Mr. Chairman--and this will be my final 
comment on this--there will be a few people at the top of the 
Department replaced, but there are many people there that have 
been there for a number of years that have the responsibility 
for enforcing these laws. I would like to know why they haven't 
been.
    Chairman Miller. And I think it is----
    Mr. McKeon. If it is because of their top leadership, then 
that should be brought out----
    Chairman Miller. I think as we will see, they utterly 
failed in that obligation.
    Dr. Price. Mr. Chairman, if I may? May I ask a question of 
the chairman?
    Chairman Miller. Yes.
    Dr. Price. And I apologize for being a bit late, but are we 
going to--is this Committee going to have the Department come 
in and respond to this report at any point? Is that----
    Chairman Miller. That is my intention. When we start to 
consider legislation, we will want their response as to what 
happened here and what we need to do and what we should do 
going forward.
    Dr. Price. In hearing format?
    Chairman Miller. I would expect so, yes.
    Dr. Price. Thank you.
    Chairman Miller. Mr. Kutz, welcome to the Committee. Let me 
just introduce Mr. Kutz to the Committee once again. He needs 
no introduction for the members, but certainly for the 
audience.
    Gregory Kutz is currently the managing director of GAO's 
Forensic Audits and Special Investigations Unit. Mr. Kutz has 
testified and been responsible for investigative reports about 
the Federal Government's handling of Hurricane Katrina and 
Rita, security at airports and borders, and security of 
radioactive materials, among other important issues.
    Mr. Kutz has testified before the Committee several times, 
including last Congress, when he testified about abuses in the 
teen residential treatment industry.
    Mr. Kutz is accompanied by Jonathan Meyer, who is the 
assistant director of GAO's Forensic Audits and Special 
Investigations Unit.
    Mr. Kutz, welcome to the Committee, and we look forward to 
the testimony. You know the rules. We will give you 5 minutes 
here to try to summarize your report and then open it up for--
10 minutes, excuse me, 10 minutes for you to summarize your 
report and then open it up for questions. Thank you.

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

    Mr. Kutz. Mr. Chairman and members of the Committee, thank 
you for the opportunity to discuss the Department of Labor's 
investigations of wage and hour complaints.
    Last July, I testified before this Committee that 15 cases 
of wage theft were not adequately investigated. Today's 
testimony highlights the results of our investigation into 
whether those 15 cases were isolated or the tip of the iceberg.
    My testimony has two parts. First, I will discuss the 
results of our investigation. And, second, I will discuss our 
recommendations and conclusions.
    First, our covert testing clearly shows that the complaint 
intake process is fundamentally flawed. Posing as fictitious 
wage theft victims, we filed 10 common complaints with Labor 
offices across the country. We also posed as a fictitious 
employer that had committed the labor law violations.
    Examples of our findings include: no response to a message 
we left that children were working during school hours and 
operating circular saws and meat grinders; one fictitious 
employee being told not to file a complaint unless he had 
another job lined up; investigators accepting employer refusals 
to pay without question; and cases recorded in the system as 
paid, even after our bogus employee told the Department that 
they were not.
    We also found that most calls we made during business hours 
went directly into voicemail and oftentimes were never 
returned. At the end of my presentation, I will play several 
clips from the undercover calls we made to Labor offices across 
the country.
    We also investigated cases involving over 1,000 actual wage 
theft victims. These cases were identified through data-mining, 
and thus they cannot be projected to all investigations. 
However, they clearly show that many investigations are not 
adequate.
    For example, one employer agreed that it owed 93 employees 
$200,000. However, this employer stalled until the 2-year 
statute of limitations had expired. This case was closed with 
no collections.
    In another case, an investigator found that 438 employees 
were owed $230,000. This case was not assigned for 22 months 
and, once again, ultimately was closed with no collections.
    One allegation was from an employee that worked at a 
sheriff's office. The investigator closed this case after two 
phone calls were not returned.
    We also found that conciliation cases are oftentimes not 
recorded in the Department of Labor's systems. Conciliations 
generally reflect complaints of one or several employees. We 
found that the head of the southeast region, which has about 57 
percent of these types of complaints, instructed offices in 
that region not to record failed attempts at conciliation.
    Thus, it is not surprising that our statistical sample 
showed that 95 percent of recorded conciliations were 
adequately investigated. This is a good news-bad news story. 
The good news is that, when adequate investigations are 
performed, there are often positive results. The bad news is 
that likely thousands of these failed conciliation cases are 
never recorded in the system.
    Non-conciliation cases generally involve a larger number of 
employees. Our statistical sampling of these cases showed that 
81 percent of the time they were adequately investigated. For 
example, in one case, it was completed in 4 months with $59,000 
collected for 12 convenience store employees. This case 
involved detailed payroll analysis and complete follow-up to 
ensure that all of the employees were, in fact, paid.
    The flip side to this is that 19 percent of the larger 
cases are not adequately investigated. This leaves thousands of 
victims vulnerable to wage theft with no help from the Federal 
Government.
    Moving on to my second point, based on our overall work, we 
have concluded that the complaint intake and investigation 
processes are not effective. We plan to issue a report with 
several recommendations to Labor to improve their human 
capital, processes, and the use of technology.
    For example, we were surprised to find that investigators 
had no special technology or tools to do their work. If Labor's 
mission in this area is to properly investigate wage theft 
allegations, then they need specialized tools to research and 
identify individuals and businesses. My unit would be far less 
effective in serving the Congress without the critical research 
tools that we use every day.
    In addition, throughout our work, we found many symptoms of 
human capital problems. We will be recommending for Labor to 
take a look at matters such as hiring, training, and whether 
sufficient staff are on board to achieve the mission.
    In conclusion, our work shows that the 15 cases I described 
for you last year were, in fact, the tip of the iceberg. I am 
concerned that thousands of victims of wage theft become 
frustrated with the complaint intake process and never actually 
file complaints with Labor.
    Thousands of others who file complaints find themselves 
victims of unscrupulous employers who know how to beat the 
system.
    I am also concerned that, with the current economic crisis, 
that wage theft is increasing. Congress and the new 
administration have an opportunity to make changes that would 
better protect our nation's most vulnerable workers.
    Mr. Chairman, as I mentioned, I would like to now play some 
clips from the undercover calls we made that will give you and 
the members of this Committee an inside look at what real 
victims of wage theft can face when dealing with the Federal 
Government.
    [Begin audio clip.]
    Voice. Okay, well, you will have to pay him at least the 
minimum wage for all the hours that he worked.
    Voice. Well, you know, like I said, all of our contracts 
have dried up. We really don't have anything coming in, so----
    Voice. Okay, so you are not in a position where you can pay 
him?
    Voice. No.
    Voice. Okay, well, then I will let him know that he has his 
private right to action to pursue the funds.
    [End audio clip.]
    [Begin audio clip].
    Voice. Once the employer tells me that they are not going 
to pay and that they can't, my ability to, you know, force 
payment has ended.
    Voice. So you really have no power to do any--all you did 
was just call her and ask her to pay me. I mean, she is just--
--
    Voice. And, well, the thing is that--I explained the law to 
her. She knows that she needs to pay you. It is just that she 
is saying she doesn't have the money to. I can't wring blood 
from a stone.
    I am bound by the laws that I am able to enforce, the money 
that Congress gives us and all of that lovely stuff. If you are 
having a problem with what our office is capable of achieving 
based on the laws that were written, then you need to write 
your congressman. Okay, do you know who your congressmen are? I 
mean, we can use all the help we can get.
    [End audio clip.]
    [Begin audio clip.]
    Voice. You are sure you don't want to just have a nice 
conversation with him yourself?
    Voice. No, no, I don't want to, because he gets very loud 
and angry.
    Voice. Okay, well, here is another avenue that you can 
pursue. Okay, do you have another job lined up?
    Voice. No.
    Voice. Okay. You might want to do that before you file a 
complaint with us, because I can't guarantee that he is not 
going to fire you.
    [End audio clip.]
    [Begin audio clip.]
    Voice. Yeah, they have to have a certain ADV amount for us 
to have enterprise coverage, and we don't have it.
    Voice. What does that mean? I don't understand.
    Voice. What the gross sales is for that year.
    Voice. How do you get that?
    Voice. We report off of the IRS statements.
    Voice. Oh. So you check with IRS and IRS says that he 
reports less than that?
    Voice. Yes.
    [End audio clip.]
    [Begin audio clip.]
    Voice. We have a backlog right now of about like 8 months, 
8 to 10 months.
    Voice. Okay.
    Voice. And we are not even going to be starting an 
investigation until 8 to 10 months.
    [End audio clip.]
    [Begin audio clip.]
    Voice. Please leave a message and the officer of the day 
will return your call as soon as possible.
    Voice. I have seen a place--I think it is called CP&D Meat 
Packaging or something like that in Modesto, California. I have 
seen kids working there; I believe they are under age. They 
seem to be working all day, probably during school. They are 
working on some heavy type of equipment like, I guess you call 
them circular saws and the ones--the machine that makes like 
hamburger meat.
    [End audio clip.]
    Mr. Kutz. Mr. Chairman, that ends our statement. Mr. Meyer 
and I look forward to your questions.
    [The joint statement of Mr. Kutz and Mr. Meyer follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                                ------                                

    Chairman Miller. Thank you very much.
    When you look at the 10 cases and the other cases, I mean, 
you really see an array of just failures and, in some cases, 
construction of misinformation and misleading and wrong 
information to the individuals.
    I mean, you have these incredible delays, which are 
obviously--the delay is very--it appears to turn out to be 
costly to the employee, because the statute of limitations has 
already started running. So if the Department uses up 5, 6, 7, 
8 months before they even investigate or they just drag the 
investigation along, the employee all of a sudden loses their 
right to go to court.
    Is that correct?
    Mr. Kutz. That is correct, yes.
    Chairman Miller. So then you have other situations where 
they just--they don't record the complaints at all, so the 
Department is never on the hook for whether they have 
successfully completed the investigation and gotten money for 
the person or resolved the case. That is not part of the 
database.
    Mr. Kutz. Yes, 5 of the 10 cases that we did the undercover 
calls were not recorded in the Labor Department's system.
    Chairman Miller. And you also have--we heard on the tapes 
here where you have employees basically just saying, ``We asked 
the employer to pay you. They said they are not going to pay. 
We are done.''
    Mr. Kutz. Correct. That is something we have seen 
frequently, not just this time, but the 15 cases from last 
year, also.
    Chairman Miller. You know, it is really quite stunning. But 
then, on top of that, I think it was the last tape that we 
heard, you heard an employee--the employee of the Wage and Hour 
Division basically make up a scenario that never occurred, 
about going to the IRS and not having the wage--so you have an 
employee openly lying, constructing a lie to the person whose 
wages have been illegally taken, been stolen from them.
    This government employee is lying to them about why they 
will not pursue the investigation, because they went to a non-
existent database on a non-existent case and came back and 
said, ``We can't help you.'' Is that correct?
    Mr. Kutz. That is correct. And we have referred that 
individual to the inspector general of the Department of Labor 
for potential administrative----
    Chairman Miller. So there is some level of malfeasance 
here. When you start lying to the public about the law that 
some action can be taken, you referred that to where?
    Mr. Kutz. The Department of Labor inspector general.
    Chairman Miller. The inspector general of the Department of 
Labor?
    Mr. Kutz. Correct. And the Department of Labor was 
concerned. We talked to the Department of Labor, people in 
charge of this division. They were very concerned about 
employees lying to citizens who call into the hotline.
    Chairman Miller. I would hope that they would be, when we 
have got to at least start with some base of obligation here, 
in terms of doing the job on behalf of the public.
    Well, I am encouraged that you have made that referral. 
Hopefully, that will help other employees think about what 
their obligation is.
    But even the act of simply saying, ``We asked the employer. 
The employer told us no,'' and that that is the end of the 
case, the employees could do that themselves, and they probably 
already have been told no by the employers.
    So, I mean, what they are looking for is additional 
resources and help when they come to the government, are they 
not?
    Mr. Kutz. Yes. I mean, when I was talking about symptoms of 
human capital problems, the discouraging of people from filing 
complaints would seem to be a symptom that there are either not 
enough people to answer the phones, not enough people to follow 
up investigations, or something along those lines.
    And, certainly, they are making decisions that the small 
conciliation cases I mentioned, which are one or several 
employees, are low priority, and that makes sense, compared to 
the bigger cases, but they have got to--they have to be honest 
with people and say, ``We just don't have time to get to you.''
    And, again, you did see the one case there where they said, 
``We have got an 8-to 10-month backlog. We won't get to your 
case for 8 to 10 months.'' And as you said, the clock ticks on 
those cases, so that doesn't necessarily help the employee.
    Chairman Miller. You know, you have--I guess there is a 
problem here. You know, in one of the cases, not in your 
undercover case, but in the other one--I think it is number 
two--you know, it is $800 in back wages. That is a small case, 
perhaps, for the Department of Labor. To a worker and to a 
family, that week or that 2-week pay period, whatever it is, 
that is a significant chunk of money.
    And that is important to them. And to just be told that the 
answer is no, that is a loss of $800 to that individual. I 
mean, that is----
    Mr. Kutz. Yes, I mean, that is----
    Chairman Miller. I don't know what the threshold is. Did 
you find any formal threshold at which point you did not 
proceed, the Department of Wage and Hour did not proceed to 
recover wages?
    Mr. Kutz. We have asked that question at two levels. Number 
one, from an investigation standpoint, is there a threshold 
where you will actually do an investigation? And it is unclear 
what that is.
    And number two is, when you have a legitimate case, we have 
seen cases with tens or hundreds of thousands of dollars. 
Sometimes they are litigated by the solicitor's office; 
sometimes they are not.
    I mean, certainly their criteria is large, we believe, but 
why some large or semi-large and other semi-large aren't, why 
some are and some aren't, we are not completely clear, and it 
is not documented exactly what that criteria would be.
    So it is two levels. I mean, sometimes they are not 
actually supporting the investigators by taking it over the 
goal line and going to court with the unscrupulous employers in 
those cases.
    Chairman Miller. You know, you have cases--you have $66,000 
for 21 employees, where basically--I think it is case number 
nine, the ambulance company. The Wage and Hour Division 
essentially walked away from that case. They just said, well, 
it has taken too long.
    You know, $47,000 in overtime to 98 employees, again, they 
cited some evidence as a reason for not having the employer 
pay. The evidence turned out to be essentially fictitious. It 
did not exist.
    A hundred and fifty thousands dollars due 191 employees, 
the employer said that he would have to file bankruptcy. They 
took that as acceptable, did nothing more on behalf of that 
person. Well, I guess they negotiated it down----
    Mr. Kutz. At that point----
    Chairman Miller [continuing]. But the person never filed 
bankruptcy.
    Mr. Kutz. Right. They compromised on that.
    Chairman Miller. They compromised on that. You have 241 
employees that were owed nearly $2 million in overtime, and 
Wage and Hour rejected the employee's offer to pay $50,000 in 
back wages and then eventually sent letters saying, ``This 
employer is not going to pay. You are on your own.''
    Mr. Meyer. Correct.
    Mr. Kutz. Correct. Yes.
    Chairman Miller. So, again, we don't know that--here you 
have $2 million, and you have an $800 theft of a paycheck. 
There is apparently no threshold within the Department.
    Mr. Kutz. No, only they define that conciliations are small 
and non-conciliations are large. But even within those, they 
are pursued with different levels of enforcement and 
aggressiveness with respect to calls, site visits, or whatever 
other types of things.
    And as you mentioned, the bankruptcy thing is interesting. 
There are several cases where they closed the case because they 
said the company was bankrupt. We checked our databases: They 
are not bankrupt.
    I mean, and it gets into those tools I mentioned. Do they 
have the right tools to do investigations? There are tools out 
there where you could check things like bankruptcy fairly 
readily.
    Chairman Miller. But they just don't go through that 
forensic process?
    Mr. Kutz. I don't believe they have--I don't believe they 
have the tools in that particular to use. That is what I 
understand. Is that correct?
    Mr. Meyer. That is correct. They don't have access to 
public court records. That is just not part of their processes.
    Chairman Miller. Did you see any change from when you 
testified in Congress to the end of the year? I mean, did you--
when you were doing this investigation, did you see any change 
from your initial determinations? Was there any response to the 
initial GAO report?
    Mr. Meyer. I can speak to that. Initially, from our 
testimony last year, there was some level of disbelief. But in 
our closing conferences on this report and the--especially the 
statistical sample testing, the Wage and Hour officials in 
Washington have seen the problems that are there and really 
seem concerned about what we found and are looking to find ways 
to improve.
    Mr. Kutz. Well, Mr. Chairman, I would say, too, that we now 
know that there are many cases that are properly investigated 
and collected. And so the real issue is: Why are 81 percent of 
the big cases done effectively and 19 percent not?
    The good news is, 81 percent there is an effective 
investigation, but 19 percent represents tens or hundreds of 
thousands of people over time. That is pretty significant. And 
so why there are those differences like that, that to me is too 
high of a rate of unsuccessful investigations.
    Chairman Miller. Just one last question, and then I will 
turn to my colleagues. Is there a regional difference? Is it a 
regional explanation? Is it----
    Mr. Meyer. I would say that, in certain regions of the 
country, whether there is a strong state labor enforcement 
state officials that enforce labor laws makes a difference in 
how effective the Wage and Hour Division is because of the 
assistance they receive from the state.
    Chairman Miller. So if the state is running a strong 
operation, it is more likely you will have stronger enforcement 
at the federal level?
    Mr. Meyer. I think it allows the resources at the Wage and 
Hour Division to handle some of the bigger cases, some of the 
more problematic instances, instead of a lot of these smaller 
individual cases for one person.
    Chairman Miller. I see. Thank you very much.
    Thank you, Mr. Kutz.
    Mr. McKeon. Thank you, Mr. Chairman.
    I am still in a little bit of a quandary of what we are 
doing here. We can beat up on the Department of Labor, but we 
don't have them to really hear--I mean, there is--what you are 
talking about, the 19 percent, it sounds to me it is pretty 
indefensible, but I would like to see somebody here and to hear 
what they have to say about it.
    When I was in school, 80 percent was a B. The 19 percent 
probably should get an F. But why this is happening, I would 
really like to know.
    Can you tell me, Mr. Kutz, how many people work at the 
Department of Labor?
    Mr. Kutz. No, I don't know. We know within Wage and Hour 
there are over 700 investigators and a little over 1,000 staff. 
We focused on the Wage and Hour Division. I am not familiar 
with the whole Department of Labor.
    Mr. McKeon. Seven hundred investigators and 1,000 staff. So 
1,700 people work in the Wage and Hour----
    Mr. Kutz. No, that is total. The total is 1,000. There are 
several hundred technicians and other administrative--that is 
700-some investigators.
    Mr. McKeon. A thousand people?
    Mr. Kutz. Roughly.
    Mr. McKeon. To investigate how many complaints, would you 
estimate, in a year?
    Mr. Kutz. Well, in the system in 2007, there were a little 
over 30,000 recorded. But as I mentioned, a lot of cases never 
get recorded in the system, so it is probably 30,000 plus 
several thousand more, at least. Let's say 40,000.
    Mr. McKeon. So at least 30,000?
    Mr. Kutz. At least 30,000, yes.
    Mr. McKeon. And we have got 1,000 people to investigate 
30,000 and they are doing a good job on 81 percent of them and 
a lousy job on 19 percent of them.
    Mr. Kutz. Of the bigger cases, correct.
    Mr. McKeon. You know, maybe we are just holding this 
hearing to beat up on the Bush administration. I don't know. 
But out of----
    Chairman Miller. If I were one of the 20 percent, I think 
you would want to know what happened to my wages.
    Mr. McKeon. No question. That is why I would like to see 
somebody from Department of Labor that we could zero in on. I 
didn't disturb you, Mr. Chairman. I appreciate it. Thank you.
    Mr. Kutz, you have testified as to the failures of 
frontline rank-and-file federal employees at the Department of 
Labor in handling and processing wage and hour complaints. 
There is nothing in your testimony to suggest that these 
shortcomings were the result of any directive by any political 
appointee of the prior administration, is there?
    Mr. Kutz. Nothing that we saw of that, no.
    Mr. McKeon. You are not suggesting that these career 
federal employees were told by Washington to mishandle or delay 
processing complaints, are you?
    Mr. Kutz. We have no evidence of that, no.
    Mr. McKeon. Again, that is why I wonder why we are going 
through this.
    You have testified at length about your findings at this 
most recent analysis of case handling. By way of comparison, do 
you have any similar analysis of enforcement under prior 
administrations?
    Mr. Kutz. I believe the other GAO report went back into the 
1990s and showed declining numbers of investigators of about 20 
percent, but I don't know if we have got any program reviews in 
the 1990s that I am aware of.
    Mr. McKeon. Possibly if we increased the number of 
investigators, you say this started decreasing back in the 
1990s?
    Mr. Kutz. It started decreasing from 1997 to 2007. It 
reduced by about 25 percent the number of investigators in this 
division. So over a 10-year period, it went down by 20 percent 
to 25 percent.
    Mr. McKeon. That may be one of the solutions that we could 
attack to help the other 20 percent or 19 percent.
    Has your study revealed any evidence to suggest that 
frontline, rank-and-file government workers were handling cases 
differently during the Clinton administration?
    Mr. Kutz. We don't know that, can't comment on that.
    Mr. McKeon. Or the Bush administration before that or the 
Reagan administration before that?
    Mr. Kutz. No, no. We just know for the last 2 or 3 years. 
That is the timeframe we have looked at.
    Mr. McKeon. Okay, so I--Mr. Chairman, I think that this is 
a really important issue. If we have 19 percent of people who 
have serious complaints--it sounds to me like we do--we ought 
to really bring the Department of Labor in here, ask them why 
this is happening, ask them if they think that, by adding 
additional people into the Wage and Hour investigation process 
would help solve this, then we should do something about 
changing the budgetary requests or the budgetary requirements 
or something within the Department.
    You know, I don't think we disagree that people should be 
paid for their work. You know, I think we are all in agreement 
on that. If this is just a political witch hunt to try to blame 
the Bush administration, that is one thing. If it is to really 
solve the problem, then we should have people here from the 
Department, we should get to the bottom of it.
    I personally think, aside from hearing--you know, I mean, 
this is pretty bad stuff, what you have shown here--that if we 
have people at the Department, career people that are giving 
these kind of responses to people that are making serious 
requests, that should be handled.
    And it sounds like you are not blaming it on the 
administration giving false direction. They are telling them to 
do certain things a certain way. Of the 15 people that you 
called, were you able to nail down to like a couple of 
employees that were making the same mistakes over and over or 
giving these kind of----
    Mr. Kutz. In the Baltimore office, there was one individual 
that answered the phone several times. There is usually one or 
two people answering the phone, and so we did six different 
offices.
    I will tell you the office that we did work: Baltimore, 
Birmingham, Dallas, Miami, San Jose, and West Covina, 
California. Those were the six offices we called.
    So you typically would get the same person if you made 
multiple calls to an office. But Baltimore----
    Mr. McKeon. Then----
    Mr. Kutz [continuing]. Several of the ones you heard on the 
audio earlier were the same person in Baltimore, some of the 
more egregious cases.
    Mr. McKeon. Then I think we could seriously nail down some 
of this stuff and fix it. And that is what we should be doing.
    Mr. Kutz. And we agree, too. The Department of Labor asked 
us for the information so they know who those employees are and 
they can do training, counseling, administrative actions, 
whatever the case may be. So we will share with them that 
information.
    Mr. McKeon. And maybe they have made progress in that we 
don't know about. And that is why, again, we should have 
somebody here from the Department to find out.
    I think we understand that most of these are career 
appointees--I mean, not appointees. They are career people that 
have applied for jobs, that have taken jobs, that are doing the 
jobs, and maybe out of the 1,000 people, maybe 990 are doing a 
good job or maybe 900 are doing a good job or maybe 10 are 
doing a terrible job or 100 are doing a terrible job.
    But at some point, we should get serious about really 
fixing the problem instead of trying to point political blame. 
That is my point in this whole thing, Mr. Chairman.
    Chairman Miller. Thank you. The chair will recognize 
himself.
    You want to keep talking about political blame. Let's just 
understand something: I became chairman of this Committee 2 
years ago. I don't remember any oversight on this problem prior 
to my becoming chair.
    We asked a question of GAO because this issue has been 
raised. It was raised many, many years throughout the 
construction trades, throughout all kinds of occupations. We 
could get no responses.
    We asked GAO. They investigated the time and period. They 
couldn't go back and investigate what--you know, we weren't 
there, they weren't there, and this is what we found.
    When we saw the first report, we said, ``You know, this is 
a serious problem. Would you go in-depth and find out, was your 
first report, you know, an anomaly or is there something 
systematically wrong with this? Is this a systemic problem?''
    They have come back now with this report that says it is 
much more widespread, and it is about 20 percent--19 percent, 
20 percent of the cases. It is serious. It is costing people a 
lot of money. They are not following through. We will then take 
the next step.
    So, you know, it falls on whatever watch you want. This 
isn't about the politics of that. I became chairman, and I 
asked this question, because I have--you know, the issues of 
people being paid off the books, people being denied overtime, 
this is not new.
    It may be new to you and to this Congress because there was 
no concern expressed about this over the last many years. And 
so here it is, and we will have the Department of Labor in. We 
expect them to partner with us to work out the solutions to 
this problem and get these people the wages that they are due.
    Many of these people will never see their wages because 
there was a lack of oversight, there wasn't due diligence on 
this issue. We would hope that people now and the Department, 
recognizing the problem they have there, will change. And I 
think it will under the new secretary and new people. Why would 
you carry on in this inherited problem?
    But the purpose of here is to get the change on behalf of 
working people that every day are losing wages that are 
entitled to them. So we will go through this process, and 
everybody will be included, and everybody will have a chance to 
participate.
    Mr. McKeon. Mr. Chairman, may I respond?
    Chairman Miller. Sure.
    Mr. McKeon. You became chairman a little over 2 years ago. 
I was chairman a little less than a year. At the time, we were 
very, very busy, as you remember, finishing up conference on 
the pension bill, passing the mining safety law----
    Chairman Miller. No, I am not saying you weren't doing your 
job.
    Mr. McKeon. I understand.
    Chairman Miller. I am just saying, but, you know, you asked 
a question of GAO and they come back to you. But you know what? 
You don't have to use your staff. God bless the fact that we 
have got GAO. They went off and did the work. They came back 
with the results. We were fairly busy, too, if I remember. So--
--
    Mr. McKeon. Yes, we are all----
    Chairman Miller. You know, this is just a question of 
whether or not this is a priority.
    Mr. McKeon. We are all real busy here.
    Chairman Miller. This happens to be a priority for me----
    Mr. McKeon. What I would----
    Chairman Miller [continuing]. I hope for the Committee, and 
I hope for the Department of Labor.
    Mr. McKeon. Now may I respond?
    Chairman Miller. Sure.
    Mr. McKeon. And I will respond, and I will not interrupt 
you when you respond.
    Chairman Miller. Just having a conversation.
    Mr. McKeon. That is great. What I would like to say is, I 
am totally in agreement with you that this should be fixed.
    Chairman Miller. I knew we would get there. Excuse me. I am 
sorry.
    Mr. McKeon. We get along well personally. I will try to 
maintain the decorum of not interrupting you again.
    Chairman Miller. And I am going to try really hard, too.
    Mr. McKeon. That would be great, Mr. Chairman. Now, I think 
we are in agreement that there is a problem with this 19 
percent. I think we are in agreement of how we should fix it. I 
am not concerned about blaming you because you have just been 
chairman for 2 years, and I was just chairman for a year.
    I think the important thing is, they have not been able to 
tell us that this didn't happen under FDR, you know, or under 
Truman. What we--the important thing is that it is 19 percent 
of people that need to be helped. And there is a way to address 
that. And I think that it is important that we do that and it 
is incumbent upon us to do that.
    And I will work with you to make sure that that happens. I 
just want to make sure that we are not trying to play a game of 
political blame, that we are really trying to help the 19 
percent. And I think that there is a way to do it. We are going 
to have to get the Department in here and in a non-finger-
pointing way go after those employees that are not doing their 
job.
    They are hired. They are paid. And then, once we find out 
that all 1,000 of them are doing their job adequately, if they 
still can't get to the 19 percent, then they should hire more 
people, and they should be adequately trained, and they should 
understand the importance of their job is to uphold and carry 
out the law so that people are paid for an honest day's wages 
for an honest day's work.
    Thank you, Mr. Chairman.
    Chairman Miller. Thank you, Mr. McKeon.
    Mr. Kildee?
    Mr. Kildee. Thank you, Mr. Chairman.
    Mr. Kutz, you said that the complaint input system is 
fundamentally flawed. Does it need restructuring or just 
adherence to the present rules and regulations?
    Mr. Kutz. I think it is a combination of improved customer 
service. You heard the audio here and the way that people were 
treated sometimes. I think it is a matter of tone and the way 
you treat people with respect.
    And it is also a matter of competence, with making sure 
that all the cases are recorded in the system. I mentioned 
cases aren't recorded in the system. So, for example, if you 
have a repeat employer that is making all kinds of--having all 
kinds of issues and you don't record cases in the system, how 
can you go back and make sure, when a new complaint comes in, 
that that employer hasn't done several other wage theft or 
other types of violations?
    And so it is a combination of customer service, competence, 
and enforcement at that front intake process. And to me, if you 
don't do a good job at the front of the process, you don't even 
get to the 19 percent necessarily, because some people will 
probably walk away and not even file a complaint.
    Mr. Kildee. Is there someone within the Department or 
agency within the Department, not GAO, but that is in charge of 
quality control?
    Mr. Meyer. I think there are individuals in Washington that 
try to do studies and monitor that situation, but, again, 
because complaints aren't recorded into the system at all, it 
is difficult to go back and check to see if a good job was done 
if there is no record of that call ever coming in.
    Mr. Kildee. I know very often if you call a company or an 
agency, sometimes you will hear, ``Your call may be recorded 
for quality control.'' That is commonly done in the private 
sector.
    Mr. Kutz. The IRS does that, too.
    Mr. Kildee. IRS does that.
    Mr. Kutz. I have listened to the call centers in the IRS, 
and other federal agencies, I believe, do that to monitor the 
quality of the responses people make. And sometimes the calls 
are not known. You are actually monitoring someone; they don't 
know you are monitoring them, where you are listening for Q.C. 
purposes.
    Mr. Kildee. I always admit, I have kind of mixed feelings 
on that third-party listening, but at least they are concerned 
about--the purpose is for quality control. And I don't see a 
real concern for quality control.
    Every investigator should be impartial. This person calling 
in, the person is in a sense a judge and a solver of this. But 
many of them seem to be on the side of the employer or have 
just worn out in the job and don't care. They come to work in 
the morning, and they go home and don't feel like kind of, ``I 
have done some justice today.''
    You know, if I were talking to one of them, I would say, 
you know, the laborer is worthy of his hirer. And each one of 
those investigators--how often and how regularly--or are they 
at all--is their investigative prowess evaluated?
    Mr. Kutz. I am not aware of any internal reviews 
necessarily, other internal reviews.
    Mr. Meyer. I think that each investigator has internal 
metrics based on back wages that they collect, the time it 
takes them to enforce a case. But as far as success rates and 
how effective they are, that is not part of the metrics, as far 
as we know.
    Mr. Kildee. So a person could get into a position where 
they could just show up?
    Mr. Kutz. Yes, I mean. I would caution the Committee, too, 
to say just throwing money at this issue is not necessarily 
going to solve the problem. You could have more people, but if 
they are the wrong people without the right tools, you might 
end up with the same result.
    So you have got to look at this from a bigger perspective 
that you need improved people, processes and systems that will 
then--are you hiring the right people? Are you training them 
correctly? Is there proper quality control over the work that 
they do, et cetera?
    So I would just caution, just throwing FTEs at this and, 
you know, repeating some of the same things that are being done 
now isn't necessarily going to get you a better result.
    Mr. Meyer. And I would add that I have interviewed multiple 
investigators in the field. And most, if not--I would say many 
of them and pretty much most of them are dedicated and 
concerned about this issue. So I don't--I think it does get 
more to your case of what you said, where they are worn out. 
There are a lot of cases they are having to respond to as 
rapidly as possible, and there is just a lot of work to be 
done.
    Mr. Kutz. Well, and that is why technology is important, 
too. I mean, you can leverage your resources better if you have 
at your fingertips the ability to determine whether a company 
is bankrupt or not, where that company is located, what their 
revenues are. They don't have those tools right now, from what 
we can see.
    And so if I were to do investigations for the Congress 
without those tools, I couldn't do the job. I couldn't be up 
here talking to this Committee and the other committees we work 
for with the kinds of investigative findings we have. You have 
got to have good technology to be an effective enforcement and 
investigative unit.
    Mr. Kildee. Now, as far as quality control, we have much 
smaller operations. I have 18 people working for me, so it is 
much easier to evaluate. But I--every week at our staff 
meetings, I say, ``When someone calls us with a problem, we 
should not take that as a burden, but as an opportunity.''
    And now that might be self-serving for me, because every 2 
years I actually get an accounting on my stewardship, right? 
But if I find people on my staff who look upon a call as a 
burden rather than an opportunity, then I don't want them on my 
staff.
    And if we could transfer some of that over to the 
Department of Labor, that could be very helpful.
    Mr. Kutz. Well, I think that is a great point. I mean, the 
culture of--is this a customer of you or someone who you are 
going to treat with--you know, we have a hotline. We get people 
that call in all the time. No matter if they are crazy, we get 
people that call and say, ``I am a paranoid schizophrenic. You 
know, I have had some sort of an experience.'' But we treat 
them all the same.
    We don't record them all as cases, because some of them 
have issues that have nothing to do with GAO or anything that 
we are able to help them with, but we still treat them all the 
same, no matter what. And I think that is an important piece of 
a culture here that needs to be addressed.
    Mr. Kildee. Thank you, Mr. Kutz.
    Thank you very much, Mr. Chairman.
    Chairman Miller. Thank you.
    Mr. Price?
    Dr. Price. Thank you, Mr. Chairman.
    Some of the--well, I will just comment that all of us 
believe that workers ought to be paid honest wage for an honest 
day's work. Some of the information that you presented, the one 
that was most disturbing was this meatpacker in Modesto, 
California, accusing child labor laws being violated and young 
people, young children missing school and working on dangerous 
machines.
    That was fictitious, correct?
    Mr. Kutz. Correct.
    Dr. Price. So it wasn't true that that was happening?
    Mr. Kutz. No. But----
    Dr. Price. The fact that the investigator didn't follow up 
on it or the DOL employee didn't follow up on it is the point, 
right?
    Mr. Kutz. Yes.
    Dr. Price. We don't want people across this nation going 
away from this hearing thinking that children are working at a 
meatpacking plant in Modesto, California, without anybody 
following up on it.
    Mr. Kutz. That is correct.
    Dr. Price. Okay.
    Mr. Kutz. It was one of our undercover agents.
    Dr. Price. I want to just correct the record. Charlie 
Norwood, who was a member of this Committee and longstanding 
member of this Committee, and passed a couple of years ago, in 
fact, did a similar oversight with the use of GAO at the 
Department of Labor's offices, workers' compensation offices, 
programs and the like, similar issues of incompetency we raised 
at that time.
    And you would acknowledge that previous work has, in fact, 
been done, would you not?
    Mr. Kutz. Yes. And I am not familiar with--I am not sure 
how far back that goes. The latest report of GAO, aside from 
the two investigative reports we did, was a GAO report issued 
at your hearing last year in July.
    Dr. Price. A couple of your comments that you made, you 
said that this is just the tip of the iceberg, that the 
complaint intake process--investigation process wasn't 
adequate. Do you have any reason to believe that this type of 
activity by career civil service employees at the Department of 
Labor is any different than at any other Department?
    Mr. Kutz. No, not necessarily. I mean, we see----
    Dr. Price. So it could be the same at other Departments?
    Mr. Kutz. Yes.
    Dr. Price. And this--your investigation focused on career 
rank-and-file employees within the Department of Labor, 
correct?
    Mr. Kutz. It focused on the 32,000 complaints that were 
recorded by Wage and Hour for fiscal 2007, and it was primarily 
related to that, in addition to the undercover calls we made, 
which are real-time calls over the last several----
    Dr. Price. And the folks who respond to those complaints 
are career rank-and-file employees of the Department of Labor?
    Mr. Kutz. That is correct. Yes.
    Dr. Price. Do you know if any of those folks are members of 
a union?
    Mr. Meyer. That wasn't a part of our discussion.
    Dr. Price. You wouldn't--they may or may not be.
    Mr. Kutz. We are not aware of that.
    Mr. Meyer. Right.
    Dr. Price. We have heard some comments from some folks on 
the Committee here that these employees were ``lying,'' seemed 
that they were ``worn-out'' or didn't care. Do you know if 
these would be the same level of employees that would be 
charged with handling, for example, a national health care 
program?
    Mr. Kutz. Don't know.
    Dr. Price. No way to know that?
    Mr. Kutz. No.
    Dr. Price. So it is possible that folks who are advocating 
for something like a national health care program that these 
would be the same level of employees that would be answering 
the phone for complaints in that area as well, is that correct?
    Mr. Meyer. The level of employees answering the phone 
ranges from, I think, a GS-5 all the way up to GS-12 
investigator.
    Dr. Price. Could be the same? Could be the same?
    Mr. Meyer. It is a----
    Dr. Price. So the prospect--it is curious that some of the 
calls that--or some of the recordings that you made or played 
for us, one of the employees gave the information to the 
individual calling that they had a private right of action. 
They could take their employer to court. That was accurate 
information, correct?
    Mr. Kutz. Yes, correct. They are oftentimes--when there is 
a backlog or we say, ``We can't get to your case,'' you can 
file a private lawsuit.
    Dr. Price. When I call the Federal Government sometimes, I 
get that, too. ``You ought to go somewhere else. You ought to 
look to somebody else. You ought to try some other avenue.''
    So it is wholly likely that folks who would be wanting to 
set up a nationalized pension plan, 401(k) plan run by the 
Federal Government that the employees who would be responsible 
for investigating or answering challenges to a plan like that 
would be the same level of employee as these folks, is that 
correct?
    Mr. Kutz. If they are between what Mr. Meyer said, GS-5 
and-12, it is possible. It is just something we don't have any 
direct knowledge of.
    Dr. Price. So the prospect for allowing the Federal 
Government to be more intrusive in other areas of our lives--
health care and financial security for one's family--might be 
under the control of folks just like the people, the 19 percent 
that have, as some others have said, were just worn-out? Is 
that accurate?
    Mr. Meyer. It is possible.
    Mr. Kutz. It is possible.
    Dr. Price. It is possible?
    Mr. Meyer. Sure, it is possible.
    Dr. Price. Well, as a physician member of Congress, it 
concerns me greatly that there are members of the House of 
Representatives who are clearly convinced this is exactly where 
we need to go, to have the Federal Government running our 
entire health care system.
    And consequently, it is instructive to look to other areas 
that the government controls, I believe, for increasing 
education of both members of the House of Representatives, 
Congress, and the American people as to what that might look 
like.
    Thank you. I yield back.
    Chairman Miller. Mrs. McCarthy?
    Mrs. McCarthy. Thank you, Mr. Chairman. And thank you again 
for holding this hearing.
    Mr. Kutz, if I remember correctly, July of 2008, we had a 
hearing almost on the same subject. Is that not true?
    Mr. Kutz. That is correct.
    Mrs. McCarthy. And at that hearing, didn't we have 
representation from the Department of Labor?
    Mr. Kutz. Yes.
    Mrs. McCarthy. And if I remember correctly, one of the 
statements that was put from the assistant secretary, 
Alexander--I am going to pronounce his name wrong--Passantino 
touted his division's effectiveness by citing WHD's own 
performance statistics and rejected everything that you said.
    He also was asked if the Department of Labor was 
effectively enforcing our wage and hour laws, and he responded 
with an unqualified, ``Yes.'' And I guess I want to--with the 
videos that we saw or the voice messages that we saw, those 
were random calls that you made. Were they to the same person 
all the time?
    Mr. Kutz. They were to six offices, the ones I mentioned 
earlier, across the country.
    Mrs. McCarthy. Across the country?
    Mr. Kutz. Baltimore, Miami, Dallas, California, yes.
    Mrs. McCarthy. Correct. You have done an awful lot of these 
investigations. With that being said, with the investigation 
that you made and the telephone calls that your Department made 
and the tapes that you heard, would you say this was probably a 
fairly large amount of people giving answers that were quite 
not true?
    Mr. Kutz. It is highly likely there are many others doing 
the same thing. You know, the one thing that we can do for 
committees like yours is give you an inside look at what a real 
person faces when they approach the government, because if we 
had gone to their offices and said, ``Hey, we are GAO. We want 
to talk to you about how you handle phone calls,'' I don't 
expect we have got any of those examples provided to us from 
the Department of Labor.
    So this gives you a real picture of what it looks like if 
you are a victim of wage theft or some other violation of FLSA.
    Mrs. McCarthy. And, by the way, I do the same thing. I call 
my office to see how they answer the phone.
    Mr. Kutz. It is a good process.
    Mrs. McCarthy. That is just something--because they are 
representing me. Well, let's go on. As we go forward with 
this--and I am sure we are going to have another hearing on 
this--what do you think needs to be done to ensure all 
complaints are at least documented at the Department of Labor?
    Mr. Kutz. Well, we believe they should be documented. I 
mean, if something is--they get a lot of calls probably that 
aren't real cases, somewhat like our hotline. They might call 
about something that has nothing to do with a labor law 
violation. Those shouldn't be given case numbers.
    But everything that comes into the system, like our 10 
calls, should be given a case number. And even if they are not 
going to work it, they should keep it in the system, because 
what if that employer comes back again and has committed 
another wage law violation? Then you give off a trend of 
information.
    If you don't report the information in the system, you 
can't do linking of cases. So with our hotline--our FraudNet, 
we call it--we give case numbers to everything. And we go back, 
and I can determine where there were other Wage and Hour 
Division things or Medicaid, Medicare, whatever the case may 
be. We can go back and research by person, company, theme, et 
cetera, to determine what has happened in the past.
    And the first thing we do about a complaint coming in, have 
they been here before?
    Mrs. McCarthy. Just to follow up on that, my office, my 
district office, and my Washington office, anyone that calls 
for help, we open up a case file for them, and it goes into our 
computer so that we can have a running issue on what we are 
doing, what they are doing, and how it ends up in the case 
before it is closed.
    So I think that we are all trained that way, to basically 
make sure that we are tracking our constituents. And each 
member has over 600,000 people that we represent.
    What do you think, as we go forward, does Labor need to do 
to assist the situation and make sure that enough proper 
trained people are in place to adequately investigate 
allegations of wage theft?
    Mr. Kutz. Well, they need to take a top-to-bottom look at 
this. It is not necessarily, do they need more people? Which 
they maybe do need more people. But it is better trained 
people, possibly. Are they hiring--what are the criteria of the 
people they are hiring? That is something we didn't look at as 
part of this, but that is a valid question. I mean, do you have 
the right kinds of people?
    Because if you have investigators that are willing to take 
a ``no'' answer and just say, ``Okay, we are done,'' I have 
investigators that work for me. Not a one of them would accept 
that as an answer. I mean, they would at least follow up with a 
second question or a--do something besides just say, ``Okay, 
thank you,'' and then they call the victim, the potential 
victim here, and say, ``We are sorry. We can't help you. They 
said no.''
    I mean, that is not really an investigation. I am not sure 
what you would call that. It is just a thing. It is a phone 
call we made.
    And so you heard our frustrated victim on the undercover 
call saying, ``Is that all you do, just make a phone call?'' 
And I think a lot of times, with the smaller cases, that is all 
that they do.
    Mrs. McCarthy. Last question. One of the other things that 
we do in our office--and I am going to ask if you think it is 
worthwhile to look into that for the Department of Labor, 
also--we retrain. Even if someone that has been with me for 13 
years, every couple of years, we go through a whole retraining 
program, because new techniques are always coming up, new ways 
of handling things that were always coming up.
    I was just wondering if that would be something that would 
be important to do for the Department of Labor?
    Mr. Kutz. Yes. Do they do something like that?
    Mr. Meyer. Yes, there are annual updates that investigators 
go through. I think a focus, though, needs to be shifted in 
some cases from compliance assistance and, you know, trying to 
go out there and walk the thin--the middle line between the 
complaint and the employer--to enforcement of laws. It is an 
emphasis on enforcing the laws on the books, needs to be re-
emphasized with investigators every year to make sure they feel 
that their job is important and to get it done.
    Mrs. McCarthy. I yield back the balance of my time. Thank 
you.
    Chairman Miller. Thank you.
    Mr. Roe?
    Dr. Roe. Thank you, Mr. Chairman.
    Just a couple of questions. Could you sort of put this in 
context about how many cases--you may have said this before I 
came in to the room, but I was at another committee hearing--
but how many do they handle a person? Like you said, if you 
just answer the phone and say, ``No,'' that is hardly a case.
    But just a--I know from my experience and what I have done 
in a lifetime, I know how much I can do in a day's work. How 
many cases--are these people just overwhelmed with the number 
of cases or what?
    Mr. Kutz. There are 32,000 cases that were recorded in the 
system for 2007. And as I mentioned, a lot of cases don't get 
recorded in the system, so we know it is more. We don't know 
how many more. And they had 700 to 800 investigators for 2007, 
and they had--I think they have roughly about that amount. So 
that gives you an idea of the different volumes you are talking 
about.
    And cases are very different. A case can be one person or 
it can be thousands of people. So there is a wide range of what 
a case is. So not all cases are equal. Some cases could take 
thousands of hours to investigate; some could take a couple of 
hours.
    Dr. Roe. Well, and to follow up on that, I guess, and to 
follow up on some of the other--the questions that we asked was 
that--is there any way to measure what kind of job they are 
doing? I mean, are there any kind of standards that they are 
doing, any oversight that they are doing?
    I know some of your testimony said they weren't being very 
effective. But is there a way to measure that? We have that in 
most of our offices. We have standards, job evaluations, and so 
forth.
    Mr. Meyer. We measured these cases just based on the 
allegation that was filed and whether an adequate job was done 
of responding to that allegation and investigating it.
    In last year's testimony, the other witness from GAO 
provided statements that Wage and Hour has continually shifted 
their goals and shifted their metrics they use to measure 
compliance so there wasn't a consistent way to evaluate them 
over the years.
    But for our investigation, it was purely based on the case 
we were looking at and whether it was adequately responded to.
    Mr. Kutz. But some information they have that is useful, I 
think. They say they collected about $220 million in 2007. Now, 
again, we know based on our work they probably collected less 
than that, because a lot of stuff in the system doesn't ever 
get collected, but let's say they collected about $200 million. 
That is useful to know. Their budget is about $200 million. Is 
that a good ratio? I don't know.
    They helped 341,000 employees. Again, we probably think it 
is less than that, because we know some people they say that 
they helped, they weren't helped, but there are also tens of 
thousands, maybe hundreds of thousands they didn't help.
    So there is some useful information like that that--and the 
thing we don't know, again, getting back to asking you--if they 
are asking you for more resources, what evidence do they have 
to show you what they will do with those resources and what 
return on investment that would be? See, if I was there, I 
would say, ``Well, I want to show--if you give me an extra 
dollar, how much more can I collect for wage theft or other 
types of cases I can work to help victims here?''
    Dr. Roe. I agree.
    Thanks very much, Mr. Chairman. I yield back my time.
    Chairman Miller. Thank you.
    Mr. Courtney?
    Mr. Courtney. Thank you, Mr. Chairman.
    And thank you for holding this hearing, which is a 
completely logical follow on to last July's hearing where this 
issue was first identified and GAO testified, of course, at 
that hearing.
    And, also, for the record, for the benefit of people who 
are watching this hearing, I think it is important to know that 
Secretary Solis submitted a statement indicating that the 
Department is now hiring an additional 250 Wage and Hour 
Division case workers, which was the result of the 2009 
spending bill, which some of us in this room supported and 
others did not, but clearly there is now, with the new 
administration, movement towards strengthening the workforce 
there.
    And additionally, there are another 100 workers that are 
being brought on as a result of the stimulus bill, the American 
Recovery and Reinvestment Act, which the president, again, 
signed into law just recently. So there is good news, at least 
in terms of the strengthening of the case workers, which has 
been identified by some here today as potentially the problem.
    The other one issue which we had discussed last July, a 
pattern that emerged from your investigation was that the 
prior--well, the Wage and Hour Division case workers that were 
interacting with complainants, were being told, ``Well, go get 
a lawyer,'' as sort of the way to close out the file.
    And, again, I just want to ask you a simple question. I 
mean, in fact, the mission of the Department of Labor is to 
provide free advocacy for workers who have been denied their 
wages and, in fact, not to force or direct them to private 
representation through lawyers, isn't that correct?
    Mr. Kutz. That is an important point, yes. And that gets 
back to the issue of resources. And is the mission to serve 
only those we have the resources to? Or is it to serve all the 
people that come in?
    Is the mission to serve greater than 10 numbers of people 
or, you know, greater than 7? That is an important issue, 
because it appears the reality is they are picking and choosing 
who they are able to serve.
    Mr. Courtney. And there clearly was an irony in last July, 
which was pointed out, which--because the morning of the 
hearing in the New York Times, the administration actually put 
out a statement saying that, you know, their goal was to, you 
know, stop trial lawyers from enriching themselves from this, 
and, in fact, the opposite was occurring, which is that people 
were being steered towards private counsel as a way of getting 
a remedy.
    And, again, I think certainly this Committee wants to go 
the direction of the original mission of the Department of 
Labor, which was to, again, as an administrative agency, 
provide people with help without having to incur the expense 
and difficulty of retaining private counsel.
    Mr. Kutz. Well, and the reality is, if you are one person 
making $6 or $7 an hour, how many attorney's fees hours can you 
afford?
    Mr. Courtney. And I guess the other question is that there 
is also a time issue. Now, again, I think throughout some of 
the notes you talked about the fact that--I mean, there is a 
statute of limitations for bringing a claim, is that correct?
    Mr. Kutz. Correct, 2 years from the time of the violation, 
yes.
    Mr. Courtney. So if you filed a complaint, you are waiting, 
you are waiting, and then the case is closed out by saying, 
``Go get a lawyer,'' I mean, the fact is, is that you are--that 
scenario makes it even worse for people.
    Mr. Kutz. Right. Sometimes the clock runs out, and 
employers know that, and some of the egregious ones stalled, 
and eventually the case went away with no collections.
    Mr. Courtney. And, lastly, just looking at the locations of 
where some of these cases were--took place, I mean, I am 
seeing, you know, from the West Coast to the East Coast and in 
between. I mean, the fact is, is that this seems to be a much 
more widespread problem than one field office from, again, just 
the report that you have submitted here. I mean, is that a safe 
conclusion to make?
    Mr. Kutz. I think we have done enough work to say that, 
yes, this is a national issue. We can't say every single office 
has the same problems, but there are many, many offices that 
have these types of problems, yes.
    Mr. Courtney. Great.
    Thank you, Mr. Chairman.
    Chairman Miller. Thank you.
    Mr. Sablan?
    Mr. Sablan. Thank you, Mr. Chairman. And thank you for your 
leadership on this very important issue.
    Thank you, Mr. Kutz and Mr. Meyer.
    I am trying to learn something here. In your undercover 
testing, how did you arrive at the types of jobs to use to 
determine? This was very thorough, and I am trying to----
    Mr. Kutz. Yes----
    Mr. Sablan [continuing]. Was there a certain, you know, 
scientific testing you--or process you did? I am trying to 
determine if these are--if the lack of attention given to these 
cases are because they are for certain types of jobs or a--
those making so much money per hour, or if they are, you know, 
minimum-wage-earners or--where is the lack of attention? Is it 
just endemic throughout the system for----
    Mr. Kutz. The undercover calls we made were what we thought 
were common complaints we had seen in the database. And the one 
was the child labor one. I will just give you the other--some 
examples. We did dry cleaners, convenience store, dishwasher, 
janitor, painter, lawn mower service. Those are pretty typical 
of what we have seen in the database of legitimate complaints 
coming in.
    So we tried to recreate what would be a legitimate 
complaint and legitimate scenarios out there.
    Mr. Sablan. And this was done throughout the nation?
    Mr. Kutz. Yes. Again, six offices, Baltimore, Birmingham, 
Dallas, Miami, San Jose, and West Covina, California. Those 
were the six offices we made those 10 calls to.
    Mr. Sablan. Thank you, Mr. Chairman.
    Chairman Miller. Thank you.
    Ms. Titus? Congresswoman Titus?
    Ms. Titus. Thank you, Mr. Chairman.
    Gentlemen, you were asked if you have any evidence that the 
employees of the division had deliberately been told to 
mishandle cases. And, of course, the answer is no. But I have 
often found that lack of resources and capricious enforcement 
are generally the result and reflection of administrative 
priorities.
    So let me ask you that same question just a little bit 
differently. Do you have any evidence that the professionals in 
the Department, who should know what is needed to be effective, 
requested the resources or the tools that you say that they 
need?
    I mean, those tools seem to me to be pretty obvious. You 
are talking about training in customer service, recording of 
cases, access to information on bankruptcy. Is there any 
evidence that they were trying to do the best job that they 
could to serve these workers, help them get their wages?
    Mr. Meyer. I think speaking specifically to the information 
technology, when we raised the issue initially in our first 
audit and then in this follow-up audit, it seemed to be a new 
idea to the management in Washington, at the headquarters 
level, for Wage and Hour that it didn't--it wasn't something 
they had explored in the past. So I don't know if--I don't know 
if they considered it before this point.
    Ms. Titus. And that is just shameful, it seems to me, a 
real derelict of duty, I think, because I believe it should be 
critical to use all the tools possible to help people get their 
wages. And that is why I am so pleased to have your report and 
that the chairman is making this a priority.
    Just one other kind of more technical question, too. You 
mentioned that, in states where you have strong enforcement of 
labor laws, you have a better result at the national level. I 
know in Nevada we have had some serious problems. Are there any 
things that we can do legislatively or as we look at the 
operations of this division and that relationship with states 
to improve the situation, so that even if you have a weak link 
at the state level, we can make it work better?
    Mr. Meyer. I think when Wage and Hour reassesses their 
staffing and the allocation of resources, it should be 
important for them to consider states with, let's say minimum 
wages that are higher than the federal minimum wage. That makes 
a big difference on if the Federal Government should take a 
case or if the state should take a case.
    So that needs to be an important part of their 
consideration, because more resources are likely going to be 
needed in states where there is no state agency that can assist 
complainants.
    Ms. Titus. Okay.
    Thank you, Mr. Chairman.
    Chairman Miller. Thank you.
    Mr. Hare?
    Mr. Hare. Thank you, Mr. Chairman.
    I am not here today to finger-point and look backwards too 
much, but I think it really is important to point out to people 
that are watching this, the former Secretary of Labor, I saw 
her two times. I am in my second term. Once was in the back of 
a car with her husband at a parade running for re-election, 
Mitch McConnell, and the other was when President Obama was 
sworn in.
    I have not seen her at this Committee. But she sent the 
acting administrator, Alexander Passantino, I believe, who just 
basically said that you guys didn't know what you were talking 
about.
    Also, which I--by the way, I couldn't disagree with him 
more. I think you clearly do.
    Also, you have a Department of Labor that significantly cut 
funding for the Wage and Hour Divisions. And I am not 
suggesting that we throw people into a position and that you 
are going to solve this entire thing by having more people, but 
I do know that, when you cut the funding for the Wage and Hour 
Division, problems are going to occur.
    And, you know, I just find this, especially when you are 
talking about people's salary, an honest--as mentioned, you 
know, an honest day pay for an honest day's work, I find it 
almost unbelievable that people would do that and would treat 
people like that.
    And then, just lastly, before I have a question, you know, 
we are going to have comprehensive national health care. And 
for the people watching this hearing today, I can assure you 
that for those 47 million Americans that don't have it, I don't 
think they are going to have to worry about who is answering 
the phone. I think they are going to have something at least 
that they can go to the hospital and get taken care of.
    My question to you, your investigation revealed an 
ineffective Wage and Hour Division that discouraged wage theft 
complaints. But in the situation when complaints were recorded 
and assigned as a case to an investigator, they were often 
adequately investigated.
    To me, this indicates that many of the problems at the Wage 
and Hour could be fixed by the dedication of more resources and 
a labor secretary with the will to address wage theft 
complaints.
    What are your thoughts on community partnerships, in other 
words, with--you know, partnering up so that more people can be 
served and in a timely fashion and with respect?
    And, by the way, I just want to say, I apologize for 
getting here late. I didn't hear the complaints. But after 
listening to you testify, I can imagine just how egregious they 
were for people. Whether they were fictitious or not, the fact 
of the matter is, the person on the other end of the line 
didn't know that.
    So I am wondering what you think about community 
partnerships, knowing the shortage of the staff and some other 
things, and maybe working with some nonprofits?
    Mr. Kutz. I think that makes sense as part of an overall 
strategy for how they are going to address is, along with the 
states, as Mr. Meyer mentioned. If we have effective 
enforcement of states, it frees up the federal offices across 
the country to maybe take on bigger cases and not worry as much 
about the smaller cases.
    So partnership and leveraging resources--and I agree with 
you that just throwing money at this isn't necessarily the 
answer. Part of the money needs to go to technology. Part of 
this needs to be better processes, maybe even a better phone 
system for handling the complaints that is much more customer-
friendly.
    So it is a bigger picture, I think, than just putting more 
people on this. But community partnerships and working with 
states and others, it makes perfect sense to me.
    Mr. Hare. Do you think that the problems at the Wage and 
Hour are causing wage theft victims to not file complaints? In 
other words, when they hear that people are being treated like 
this or they get treated like--do people just start saying, 
``It is not going to do me any good to make the phone calls, so 
I am not even going to give them a call''?
    Mr. Kutz. Yes, I mean, actually, those 10 cases, we made 
115 calls, and 76 times it went directly to voicemail. And 
frequently we never got a call back. We had to call month after 
month to try to get them to call us back.
    So I think some people would give up eventually. So I 
really believe that what you said is true, that some people are 
not filing complaints because of that. And I mentioned that in 
my opening statement, also.
    Mr. Hare. And that would be--I mean, that is really a 
tragedy they are not filing a complaint because they just think 
it isn't going to matter.
    Mr. Kutz. Right. And they don't--they are making, like I 
said, $6, $7, $9, $10 an hour, and getting an attorney is going 
to be a challenge.
    Mr. Hare. Let me just ask you this. I am almost out of time 
here. What are the one or two things that we can do, that this 
Committee, this Congress can do to make sure that ordinary 
people when they call in have at least a fighting chance to be 
able to get the wages that they feel they have been denied and 
that they have coming, so that they have, you know, as I said, 
for ordinary people, bureaucracy is tough enough as it is.
    So what can we do as a committee and a Congress, do you 
think, to help these people out? Because the bottom line is, we 
can finger-point all we want to, but it is helping the ordinary 
people out.
    Mr. Kutz. I think one of the things legislatively we saw 
was that the 2-year statute of limitations sometimes when cases 
are ongoing end up running out because either they start late 
on the investigations at the Department or the employer stalls. 
Looking at specific targeted ways to possibly look at 
legislation in that area we are going to probably put in our 
recommendation and a matter for the Congress to consider.
    We don't make policy, but we offer to you to consider 
policy. I think that is a situation where you could consider 
policy.
    The other thing I would say is, again, not walking away 
from this--and as Chairman Miller said--consistent oversight of 
this until you are satisfied that the systems, processes and 
controls in place are good and we could even go back for the 
Committee at some point in time and do similar tests to what we 
did this time and see if they do better.
    Mr. Hare. Thank you very much.
    I yield back, Mr. Chairman.
    Chairman Miller. Thank you.
    Congresswoman Woolsey?
    Ms. Woolsey. Thank you, Mr. Chairman.
    Last session, my subcommittee, the Subcommittee on 
Workforce Protections, held a hearing on the lack of 
enforcement by the Wage and Hour Division of child labor laws. 
There was evidence to the contrary, but the former acting 
administrator, Passantino, testified at the hearing that child 
labor complaints were the division's top priority. And he said 
that more than once.
    So in that regard, what did your investigation find? And 
what recommendations do you have for improvements in that area 
of child labor and including farm-worker children?
    Mr. Kutz. With respect to child labor, you know, one of our 
undercover calls was a child labor call, because we knew that 
was a priority of the Labor Department. And their policy, I 
believe, or practice, at least, is that even if it is an 
anonymous tip, that they are supposed to open a case and look 
into it.
    So we planted an undercover call with them that kids were 
working during school hours, operating circular saws, meat 
grinders at this meat plant. And when we went back to look in 
the system, it wasn't anywhere. It wasn't recorded in the 
system. They hadn't done anything with it.
    And so they were concerned about that, too, because they 
don't--they agree with your statement that that is a top 
priority. But the reality was, in that case, they didn't do 
anything.
    We had seen a case like that last year, too, that was a 
child labor law complaint. So we don't have a lot of 
experience, because not a lot of the actual recorded items in 
the system are child labor complaints, but in several cases now 
we have seen that maybe it is not such a priority if they are 
not actually following up.
    Ms. Woolsey. And if there was a scattering of instances 
like this, you have to know there are many, many more, right? I 
mean----
    Mr. Kutz. Certainly. I expect there are several others.
    Ms. Woolsey. That was--yes.
    Mr. Kutz. I mean, you have to believe that.
    Ms. Woolsey. Well, then what is the deal? I mean, it comes 
from the top. So now with a new administration and a new 
Secretary of Labor, and then there will be new deputies and new 
heads of Departments, and with a new attitude, is that going to 
be enough to change this? Or is it really that the short-
staffed, under-trained, lack of motivation, I don't--lack of 
tools? I mean----
    Mr. Kutz. I think it is----
    Ms. Woolsey [continuing]. You can't make somebody do the 
job they are supposed to do if they don't have the tools to do 
them.
    Mr. Kutz. I don't think you can point at one thing. I 
think, if you just focus on throwing staff at it, it is not 
going to solve the problem. That is one element possibly here.
    But as you mentioned, culture is one thing. The right 
people, enough of them. Are they properly trained? Do you have 
good processes in place?
    An example of that is, you know, if you accept the neighbor 
saying, ``Well, the company is bankrupt,'' and then you walk 
back to the office, you close the case, and say, ``Yes, they 
are bankrupt,'' well, we had cases like that.
    Ms. Woolsey. Right.
    Mr. Kutz. And then we went back and looked in the system, 
and the company is not bankrupt. They just moved or they 
actually didn't have trucks there that day or something like 
that.
    I mean, that is a matter of just bad processes. You should 
have a process that you are going to validate--if you are going 
to say in the system that someone is bankrupt, you should 
validate that with independent evidence that that, in fact, is 
true before you drop the case.
    Ms. Woolsey. So are there training programs that you, in 
your survey, were there employee training programs that would 
help the employee know how to research whether a person was 
bankrupt or not? Or do we just assume that person is supposed 
to know these things?
    Mr. Meyer. Based on the investigators and technicians we 
talked to, their training in that area relates to looking it up 
on public searches, if a local court keeps their records online 
or if there are some Google search results that will find a 
business.
    It doesn't get to the level of sophistication that we have 
with public court records, federal court records, LexisNexis, 
some real robust technology. And I would also say, for child 
labor complaints, one way to make sure that they are dealt with 
is to force people to record the complaint when it comes in, 
because then there is at least a record that it is there.
    And I think it would be very hard for management at the 
Department of Labor to ignore those cases. And I think they 
really genuinely are concerned about them. But if it never 
makes it into the system and it is not on their database, no 
one knows about it.
    Ms. Woolsey. How about farm-labor kids? Was there anything 
in your survey, your report about them?
    Mr. Meyer. Our statistical sampling didn't randomly pull up 
any farm labor, Migrant and Seasonal Worker Protection Act 
cases. However, through interviews in the field, we did see 
that a number of offices at the Department of Labor take time 
out of their year to specifically investigate MSPA cases.
    So it is an emphasis at Department of Labor how effective 
it is. Unfortunately, it just wasn't pulled up in the random 
sample, so it wasn't a large enough percentage for us to look 
at.
    Ms. Woolsey. Well, Mr. Chairman, I would believe, with 
Hilda Solis as the new Secretary of Labor, that farm kids are 
going to have a lot more emphasis than they have in the past, 
and children in general.
    Thank you very, very much.
    Chairman Miller. Thank you. It is the intent of the chair 
that this Committee hearing will end at noon, but we will have 
a second round, if members want to participate.
    One of the things that concerns me in this construct is the 
person who may be most financially vulnerable to lost wages, in 
terms of major disruptions in their life--they could lose a car 
payment, they could lose a house payment, they could lose their 
rent, they could be evicted--they are the person that really 
has the least--has no margins for error.
    So you lose $800 in a paycheck, whether that is, again, 
over a week or 2 weeks, whatever period of time that paycheck 
has come in for, you lose that $800, you don't have margins. 
Turning to an attorney isn't really an option for an $800 case. 
And yet those are the cases that are quickly reconciled, either 
yes, no, maybe, thank you very much.
    So they get the least resources focused on them, and yet 
they are the most vulnerable. There is something wrong in that 
system. I understand why you would do it, because if somebody 
is withholding--failed to pay a couple of million dollars or 
hundreds of thousands of dollars, that seems more important, 
unless you happen to be that person that lost the $800 
paycheck.
    So it seems to me you have an obligation to do a very 
thorough investigation, maybe not terribly time consuming, but 
a very thorough investigation at the outset for that 
individual. Does that make any sense? I mean, the system seems 
to be tilted a little bit away from the average worker in the 
occupations that you cited.
    Mr. Kutz. Yes, the system is tilted away. And it gets back 
to, what is the mission? Is the Department willing to spend 
$3,000 to collect $800 for an employee? And that isn't just--
you can't just look at it as a cost basis, too. You look at 
future compliance and things like that. So just working to make 
sure that these employers know that they will go after some of 
those smaller cases can also help future compliance.
    But the reality now is they are kind of picking and 
choosing, it appears, because of issues with resources and 
technology and whatever the case may be.
    Mr. Meyer. I would also add that, for conciliation 
specifically, right now Wage and Hour's policy is to make one 
or several phone calls. And if it doesn't result in 
collections, they drop the case at that point.
    And most of the time, those are actually effective. The 
ones that we looked at in the database, most of the time a 
normal employer will comply once they have been told they have 
broken the law in some area.
    But the ones that don't should be raised to the level of a 
full investigation and followed up on. So you can have a rapid 
response and a more thorough response in those limited cases.
    Chairman Miller. And, Mr. Meyer, I assume you are saying 
that, given your--that maybe some of these people aren't the 
best trained in how to be the most effective on the phone or 
what resources they should bring in advance to that phone call. 
Maybe a little bit of work before the phone call and you speak 
with more authority, possibly.
    Mr. Meyer. True. There is very little work done before that 
first phone call----
    Mr. Kutz. Well, not only that. I mean, you did hear some of 
those. They simply said, ``Are you willing to pay?'' The answer 
was no. ``Okay.'' I mean----
    Chairman Miller. So the employer steals $800 out of my 
paycheck, whether it is overtime or regular pay, and the 
likelihood maybe is that nothing will happen. That employee 
steals $800 out of petty cash in that company, and that 
employee is going to jail. In all likelihood, that employee is 
going to jail.
    So you steal it out of their paycheck, you go past jail. 
You are free. You steal it out of petty cash, you are going to 
go to jail.
    I mean, somehow there has to be an initial investigation 
that understands what took place here. This isn't--you know, in 
many of these--this isn't a bookkeeping error. This is a 
conscious decision not to obey the law.
    Mr. Meyer, you talked about--they have to understand they 
are there to enforce the law, the minimum wage law, the 
overtime laws, you know, the hours worked, all of those things.
    So a conscious decision in many of these instances is 
simply made not to pay these individuals. A conscious decision 
to rob that business and you have two different--you have two 
different outcomes.
    Mr. Kutz. Right. If you have a situation now where 
employers know probably that, worst-case scenario, they may get 
investigated and, if so, they might have to pay what they owed 
in the first place, I mean, so you have that kind of a system 
out there----
    Chairman Miller. There is no penalty.
    Mr. Kutz. There is no penalty.
    Chairman Miller. You steal from the employee, there is no 
penalty. You steal from the employer, you go to jail.
    Mr. Kutz. You are not going to get criminal, sure. There is 
no criminal. And so worst case, you pay what you owe, and 
sometimes you compromise it down to something less than you 
owe. So it is a system with minimal teeth to it at this point.
    Chairman Miller. And there are 30,000 complaints in this 
system in 2007?
    Mr. Kutz. Correct.
    Chairman Miller. We heard when you were here in July from 
Wage and Hour that they suggested that they resolve 93 percent 
of their cases, where employers agreed to pay. Does that mean 
they got 93 percent of the wages that were wrongfully taken 
returned?
    Mr. Kutz. No. No.
    Chairman Miller. What does that mean?
    Mr. Kutz. Well, that is what is recorded in the system. As 
I mentioned for our undercover calls, in several cases, the 
employer initially agreed to pay. And several weeks later, our 
fictitious employee called back and said, ``By the way, 
investigator, they never paid me.'' We went back into the 
system several months later, and all those cases showed that 
the case was actually paid.
    So they are recording as paid if the employer says, ``I 
paid,'' but they don't go back to follow up or, even if someone 
calls and says they never were paid, they don't go back and 
change the records.
    Another important thing is----
    Chairman Miller. So not only now is the employer stealing 
from his employees, he is now lying to the government?
    Mr. Kutz. Correct.
    Chairman Miller. To the enforcement agency?
    Mr. Kutz. And we are recording it as a successful case, 
even though he didn't pay.
    Chairman Miller. Right. Yes, I would say we have a cultural 
problem here, if that is success. I don't think that is success 
for anybody on this Committee.
    Mr. Kutz. The other thing I wanted to mention on that, too, 
there is another case that we saw, too, that is very 
interesting. The actual amount owed was $150,000, but the 
amount assessed ultimately was $78,000, so it was compromised. 
What they recorded in the system was assessed $78,000, paid 
$78,000.
    So in that case, it appeared that 100 percent was paid. The 
reality is, 50 percent was paid, because they owed $150,000. So 
you always have to get behind these numbers like 93 percent and 
say, is there something more to the story than 93 percent?
    So you have several factors. I am not saying they are not 
collecting hundreds of millions. They probably are. But that 
number is probably overstated based on a number of cases we 
have seen.
    Chairman Miller. You know, you touched upon also the issue 
that about money and workload and the rest of that. It is kind 
of interesting that, as I look at the chart here, I think this 
is from CBO--the money went down 4 percent--a little--4.2 
percent from 2001 to 2008, but the full-time employees went 
down 21 percent, 21 percent, 22 percent, 23 percent.
    So, I mean, it wasn't--apparently, you know, it wasn't 
money. They just decided they were going to--I don't know if 
these people went somewhere else or whether they were 
discharged or what have you, but the numbers in the 
Department--in the Wage and Hour Division, the employees went 
down continuously over this time 21 percent, but the money to 
the appropriated dollars didn't go down.
    Mr. Kutz. Right. The number of investigators has gone down 
from 1997 to 2007 by 20 percent to 25 percent, in that range.
    Chairman Miller. Right.
    Mr. Kutz. Correct.
    Chairman Miller. Let me ask you--one of my colleagues 
raised the issue of the statute of limitations. This clearly 
works absolutely against from--at least my conclusion is, from 
looking at these cases, if the Department is not efficient, 
they are working on my time if I have a statute of limitations 
running against me and my ability to recover.
    Is there--have you thought about what the alternative would 
be for starting the statute or----
    Mr. Kutz. Well, we believe that--we were going to put a 
proposal into our report that has recommendations for a matter 
for Congress and to consider whether or not the statute should 
be extended. I am not sure what the right wording necessarily 
or how you would write the bill.
    In certain cases where there is a legitimate claim, Wage 
and Hour is investigating it, but the clock stops ticking, and 
that would be something that would help not only the Wage and 
Hour Division, but the victims who we see oftentimes get 
nothing----
    Chairman Miller. You would hold that during the 
investigation?
    Mr. Kutz. Yes, yes, I think that is the right term. I--yes.
    Chairman Miller. Yes, okay. And so then, if they did a good 
job--maybe I get my money back----
    Mr. Kutz. Yes.
    Chairman Miller. If they didn't or they refused to or 
whatever the case was, I still have my right, if they used up 6 
months of the time, I still have my full 2 years to proceed 
against the employer and have time to do that?
    Mr. Kutz. Or at least more time, because let's say it takes 
you a year to get to the first point. You would at least have 
an extra year. It depends on how you write the bill or how you 
would write that legislation, but, yes, you would have time to 
see if Wage and Hour could resolve it. And if they can't, you 
would still have at least a period to file your own lawsuit.
    Chairman Miller. When you look at other agencies, are there 
agencies that have better models in terms of measuring outcomes 
and user-friendly, customer-friendly systems in intake and 
initial investigations that the Department of Labor should be 
looking at?
    Mr. Kutz. Well, I thought the interesting idea--and I don't 
remember which member it was that mentioned the monitoring of 
the calls to determine whether people--how people are handling 
the actual people--that is an interesting idea. I have seen--at 
IRS, I have observed how they do it.
    And I think in that case they know that they are doing it, 
or at least randomly doing it, but it keeps people on their 
toes and it makes people know that we are measuring this as one 
of the considerations in your job rating and the pay for 
performance you are going to get or whatever raises you might 
get.
    So that was an interesting idea, I thought, that could be 
used on the complaint intake process.
    Chairman Miller. That would also let you know whether or 
not that case was entered into the system so that you would 
have follow-up or you would have data about that employer or 
that industry or the rest of it, would help you develop 
reliable data if that phone call was matched to a decision.
    Mr. Kutz. Yes, you have to hold the Department of Labor 
accountable to make sure that all legitimate cases are entered 
into the system, because otherwise Congress doesn't have a very 
good idea of what kind of work is not getting done.
    It would be nice for you to know that there were 6,000 
cases, or whatever the number is, that they just didn't have 
time to get to.
    Chairman Miller. You have----
    Mr. Kutz. That would be an important metric.
    Chairman Miller. You have mentioned the IRS. Do you know of 
other agencies that have done that or----
    Mr. Kutz. With respect to metrics or other processes?
    Chairman Miller. Monitoring calls or----
    Mr. Kutz. I would have to think about that. We could 
certainly think about that and get back to you no that.
    Chairman Miller. Thank you.
    Mr. Roe?
    Dr. Roe. Thank you, Mr. Chairman.
    Obviously, when you see an investigation like this, it is 
embarrassing, when you see a performance that is this poor. My 
bet is, there are a lot of people that are doing good work, 
too. And I suspect----
    Mr. Kutz. We agree.
    Dr. Roe [continuing]. That there are a lot of good people 
who go to work every day and try to do their job correctly. And 
it would look to me like--and I have been in the private world 
my entire career, except for the last 90 days, and it would 
look to me like that it would be easy to ferret out or, with 
the proper supervision, who these essentially bad actors are 
that are not doing their job well.
    And, you know, this is just not acceptable to have a 
citizen of the United States call in to one of our Departments 
and be essentially just blown off. And, I mean, it doesn't look 
to me like a terribly difficult problem to fix.
    And like you said, whether it is--throwing more money at it 
may not be. It may just be having some requirements, some 
oversight. And I think having these random calls that are 
fictitious come in is a good idea. That is a way to find out if 
it--and it may be just a few people that you are--I don't know 
whether you got to the same investigator each time or not, but 
that would be a pretty easy thing, I think, to hone in, I bet.
    Mr. Kutz. Well, what you are getting to, too, is the 
possibility of agencies testing themselves. You know, we have 
tested, for example, airport security by the TSA using--trying 
to get improvised explosive devices through the checkpoints on 
the aircraft. They test themselves, also. I mean, this is a 
case where you could have a unit set up in quality control that 
makes various calls just to see how they are handled.
    I think some of the members here have said even they call 
their own telephone system to see how their employees are 
handling potential constituents.
    Dr. Roe. You know, I think it would be--obviously, you 
all--we all know the story of the one mailman who is dumping 
the mail in the garbage truck so he doesn't have to deliver the 
mail, and it may not be a deep problem, but it is a problem. 
And it needs to be solved.
    And I think there needs to be a mechanism to do that and 
report back to this Committee.
    I yield back my time, Mr. Chairman.
    Chairman Miller. Thank you.
    Mr. Kildee?
    Mr. Kildee. Thank you, Mr. Chairman.
    Thank you, gentlemen, for all you have done. I am the one 
who mentioned the monitoring of calls, and that is--I ask this 
question in conjunction with that, but other things.
    What needs to be done to ensure that all complaints are at 
least documented at Wage and Hour Division, both technological 
things and personnel things? What can assure us that they are 
at least documented?
    Mr. Kutz. Well, sorry I didn't give you credit for that. I 
had lost track of who actually made the comment, but it was a 
good idea nonetheless.
    I would say that they need to make sure that they have 
written policies and training, that it is a requirement that 
when a legitimate case comes in the door, not a case that has 
nothing to do with any violations, cases that are within their 
jurisdiction, things that whether they investigate or not, they 
need to know about, the policy should be to record it in the 
system.
    Policy guidance was sent out in the southeast region that 
conciliations or the smaller cases are not to be recorded in 
the system if they are failed. That needs to be changed. Those 
cases need to go in the system so there is a record that that--
even if you didn't investigate it, that that employer committed 
a potential labor law violation so, if they do another one, you 
can go back and research in the system, say, ``Hey, they have 
been here before. Maybe this should become a bigger case now, 
because we have had three or four complaints come in.''
    So it needs to be a requirement, a policy, and it needs to 
be training.
    Mr. Kildee. Thank you, Mr. Chairman.
    Chairman Miller. Mr. Payne?
    Mr. Payne. Thank you very much.
    Since I missed most of the--all of the testimony, I will 
pass this time. Very rare for me, but I will do that at this 
time.
    Chairman Miller. [OFF MIKE]
    Mr. Payne. All right. Thank you. Next time I will have 
twice as much time.
    Chairman Miller. You have credits this time.
    Mr. Payne. All right. Thank you. Thank you very much.
    Chairman Miller. Mr. Hinojosa?
    Mr. Hinojosa. Thank you, Mr. Chairman, for having this 
hearing. I apologize that I was not able to be here at the 
beginning of this session, but I have a great deal of interest 
in the subject that was being discussed here today.
    I would like to ask you about conciliation. What is the 
percentage of conciliations you estimate are never reported?
    Mr. Kutz. There is no way to know. But in the southeast 
region, as I mentioned, which gets 50 percent of the--57 
percent of the recorded conciliations, the policy has been, if 
it is not successful, you don't record it in the system. So it 
certainly is hundreds, potentially thousands. We just--since 
they are not recorded, there is no way to know.
    Mr. Hinojosa. What remedies would you suggest to improve 
the timeliness of processing complaints?
    Mr. Kutz. Processing of conciliations or----
    Mr. Hinojosa. No, just complaints that are brought to you. 
What do you suggest so that it will be more timely at--there is 
a response?
    Mr. Kutz. Well, that is a big issue. And many of the 
regions around the country have known backlogs that are 8 
months, 10 months, 12 months, whatever the case may be.
    Those are region-specific issues in some cases. In some 
cases, they are national issues. So I think, on a region-by-
region basis, they have to assess whether they have sufficient 
staffing on board.
    And they have standards for how quickly they intend to get 
to cases and investigate cases. They need to make sure they 
have sufficient staffing, technology and training so that they 
can meet those. And right now, many regions--and Mr. Meyer 
could probably add comments on some of the regions that had the 
most significant problems--many regions don't meet those 
standards.
    Mr. Meyer. Right. I would say, looking at the different 
offices we interviewed with, some have adequate resources and 
are responding--you know, a caseload for an investigator might 
be three or four cases, whereas in a different part of the 
country someone has 8 to 10 cases on their desk and, when they 
get the case, it has already been 6, 8, sometimes 12 months 
since the complaint was originally filed.
    So there needs to be a review of where the resources are in 
the Department of Labor, where they need to be shifted to, and 
then, after that review has been done, decide if there are more 
resources that need to be allocated.
    Mr. Hinojosa. I know that you all have worked very hard. 
And based on the calls you made, what are some of the key areas 
that need to be addressed, in your view, to better serve low-
wage workers, hourly workers who are calling with allegations 
of wage theft?
    Mr. Kutz. Well, I mean, first of all, calls need to be 
returned. And a lot of calls were not returned. We went to 
voicemail, and they didn't call us back, so at a minimum you 
should at least call people back.
    We mentioned recording cases in the system, following up to 
make sure that, if an employer agreed to pay, that they 
actually pay, and if the employer reneged on an agreement to 
pay, you go back into the system and you correct the system to 
say that employer refused to pay and they did not pay.
    It is a matter of customer service and the quality of the 
investigations that are done, but I think one of the big things 
you need to consider is making sure that people are handled 
with dignity, respect, and timely responses with respect to 
their allegations.
    And if they can't get to their allegations for several 
months, they have to be told that upfront. And in some cases, 
they are. And as Mr. Meyer mentioned, some offices, they are 
very prompt getting to people, because they appear to have 
enough staff in place. Other ones are so overwhelmed, I think 
those are the ones that they are not even calling back people 
in some cases.
    Mr. Hinojosa. Knowing that it takes maybe months to address 
all the complaints, what types of problems did you identify 
that could be causing victims to get discouraged and not want 
to call again or notify WHD of their complaint?
    Mr. Kutz. Well, if someone tells you that, if you file a 
complaint your employer might fire you, that would discourage 
me from probably filing a complaint. So, you know, just some of 
the phone calls we played or people lying--I mean, you know, 
that was just one case. But it was discouraging that someone 
would actually lie to us and say they checked with the IRS, and 
they found that our fake company was below $500,000 in 
revenues.
    So be truthful with people, be straight with them, and 
handle them with dignity and respect, is the way we would 
suggest that they handle it.
    Mr. Hinojosa. And being that my time is almost running out, 
give us a recommendation for improvement. What do you believe 
the mission should be of WHD?
    Mr. Kutz. I think it should be a combination of--
encouraging volunteer compliance. The vast majority of 
companies in this country are going to want to do the right 
thing. And you handle them differently than the minority, which 
is going to either want to violate the law or be on the fence 
and, especially in tough times like this, maybe say, ``Hey, I 
can stay in business 2 more months if I don't--if I stiff a few 
employees,'' kind of a thing.
    And so you have got to handle the enforcement side 
aggressively, which I think helps enforce or actually encourage 
future compliance, but the vast majority of companies that are 
trying to comply, as Mr. Meyer said, if you call them up, tell 
them that they have violated the law, they owe money, they 
actually pay.
    Mr. Hinojosa. Thank you.
    Thank you, Mr. Chairman.
    Chairman Miller. Thank you.
    Mr. Hare?
    Mr. Hare. Thank you, Mr. Chairman.
    Just trying to wrap my mind around what the chairman said 
about, if somebody steals $800 from the company, they are going 
to jail; somebody steals it from the employee, you know, you 
are lucky if anybody does anything about it.
    This question may have been asked and answered, and I 
apologize if it has, but I am trying to get from your 
perspective, for the people who do the kinds of things that 
they are not supposed to do--they hang up or they return--you 
know, what is the recommendation to be able to weed these 
employees out so that they don't continue to do what they have 
been doing, which is either not talking to these people, 
hanging up on them, giving them false information, et cetera?
    So from your perspective, what does Wage and Hour need to 
do to identify these people and then to get people in there 
that are actually going to be able to get the job done so that 
ordinary people can get that $800?
    Mr. Kutz. Well, the 10 we did that were played at the 
beginning of the hearing, management has asked for the names of 
those people and the information we have. And we will share 
that with them. The individual that lied we have referred to 
the Office of Inspector General.
    With respect to the other things we have talked about here, 
such as the--Mr. Kildee talked about the potential monitoring 
of this, et cetera. Those are ideas where you could do enhanced 
quality control procedures to weed out the employees that don't 
perform, that don't treat people well on the phone, who don't 
make phone calls back, or who do poor investigations.
    So having a better quality control system in place, 
performance management system, and then, again, hiring and 
training people, are we--what kind of people--we didn't look at 
that. But what kind of people are they hiring? What kind of 
training are they giving them? What backgrounds are they?
    You know, when we hire law enforcement people, for example, 
as our criminal investigators with former executive branch 
experience. Those are people that have actually worked out 
there in the law enforcement field. They have served warrants. 
They have arrested. They have done undercover work before.
    So we bring in people with very specific qualifications. Or 
our auditors and analysts, we look for very specific 
qualifications. I don't know exactly what their hiring is, but 
it is important to target the right people.
    Mr. Hare. Thank you.
    Thank you, Mr. Chairman.
    Chairman Miller. Thank you.
    Thank you very much for your testimony this morning and for 
your investigation. And if you will thank your co-workers who 
participated in this, I would appreciate that. And thank you 
for all of the work that your office does on behalf of the 
taxpayers in this country and the committees of Congress. We 
appreciate it.
    And we would like to be able to continue to use you as an 
intellectual resource here, as we think about what changes make 
sense and not, and go forward on this problem. Thank you.
    With that, the Committee stands adjourned.
    Take 21 days, 14 days for submit statements--all the usual 
unanimous consent requests are granted to the minority for 
today.
    [Whereupon, at 11:48 a.m., the Committee was adjourned.]

                                 
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