Department of Labor: Case Studies from Ongoing Work Show Examples
in Which Wage and Hour Division Did Not Adequately Pursue Labor  
Violations (15-JUL-08, GAO-08-973T).				 
                                                                 
Over 100 million workers are protected through the Department of 
Labor's (Labor) enforcement of labor laws. Under the Fair Labor  
Standards Act, Labor's Wage and Hour Division (WHD) enforces	 
provisions that ensure workers are paid at least the federal	 
minimum wage and for overtime. The Act applies to businesses	 
engaged in interstate commerce or ones with annual sales over	 
$500,000. Conducting investigations based on worker complaints is
WHD's priority. According to Labor, investigations range from	 
comprehensive investigations to conciliations, which consist	 
primarily of phone calls to a complainant's employer. This	 
testimony highlights findings from GAO's ongoing investigation of
WHD's process for investigating and resolving wage and hour	 
complaints. Specifically this testimony will report on cases GAO 
has identified from ongoing work that show inadequate WHD	 
investigations of complaints. To develop the case studies, GAO	 
obtained and analyzed data from WHD for over 70,000 closed case  
files from fiscal years 2005 to 2007. GAO then reviewed WHD	 
documents and obtained information from publicly available	 
sources in order to determine facts about the employers that had 
complaints filed against them. The results of these cases cannot 
be projected to all 70,000 WHD cases. GAO plans to continue its  
work in this area to determine if identified case studies are	 
indicators of more systematic problems in WHD.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-973T					        
    ACCNO:   A82863						        
  TITLE:     Department of Labor: Case Studies from Ongoing Work Show 
Examples in Which Wage and Hour Division Did Not Adequately	 
Pursue Labor Violations 					 
     DATE:   07/15/2008 
  SUBJECT:   Employee grievances				 
	     Employee rights					 
	     Employees						 
	     Investigations by federal agencies 		 
	     Labor statistics					 
	     Litigation 					 
	     Minimum wage rates 				 
	     Overtime compensation				 
	     Overtime pay claims				 
	     Pay						 
	     Payroll records					 
	     Personnel records					 
	     Unfair labor practices				 
	     Unpaid wages					 
	     Wage surveys					 
	     Timeliness 					 
	     Waste, fraud, and abuse				 

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GAO-08-973T

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Testimony: 

Before the Committee on Education and Labor, House of Representatives: 

United States Government Accountability Office: 
GAO: 

For Release on Delivery: 
Expected at 10:30 a.m. EDT:
Tuesday, July 15, 2008: 

Department Of Labor: 

Case Studies from Ongoing Work Show Examples in Which Wage and Hour 
Division Did Not Adequately Pursue Labor Violations: 

Statement of Gregory D. Kutz: 
Managing Director: 
Forensic Audits and Special Investigations: 

GAO-08-973T: 

GAO Highlights: 

Highlights of GAO-08-973T, a testimony before the Committee on 
Education and Labor, House of Representatives. 

Why GAO Did This Study: 

Over 100 million workers are protected through the Department of 
Laborï¿½s (Labor) enforcement of labor laws. Under the Fair Labor 
Standards Act, Laborï¿½s Wage and Hour Division (WHD) enforces provisions 
that ensure workers are paid at least the federal minimum wage and for 
overtime. The Act applies to businesses engaged in interstate commerce 
or ones with annual sales over $500,000. Conducting investigations 
based on worker complaints is WHDï¿½s priority. According to Labor, 
investigations range from comprehensive investigations to 
conciliations, which consist primarily of phone calls to a 
complainantï¿½s employer. 

This testimony highlights findings from GAOï¿½s ongoing investigation of 
WHDï¿½s process for investigating and resolving wage and hour complaints. 
Specifically this testimony will report on cases GAO has identified 
from ongoing work that show inadequate WHD investigations of 
complaints. 

To develop the case studies, GAO obtained and analyzed data from WHD 
for over 70,000 closed case files from fiscal years 2005 to 2007. GAO 
then reviewed WHD documents and obtained information from publicly 
available sources in order to determine facts about the employers that 
had complaints filed against them. The results of these cases cannot be 
projected to all 70,000 WHD cases. GAO plans to continue its work in 
this area to determine if identified case studies are indicators of 
more systematic problems in WHD. 

What GAO Found: 

GAO identified case studies that show WHD inadequately investigated 
complaints from low-wage and minimum wage workers alleging that 
employers failed to pay the federal minimum wage, required overtime, 
and failed to pay employees their last paychecks. Examples of 
inadequate WHD responses to complaints included instances where WHD 
inappropriately rejected complaints, failed to adequately investigate 
complaints, or neglected to investigate until it was too late. The 
table below provides examples of several case studies. 

Table: Examples of Case Studies GAO Identified: 

WHD Actions, Conclusions, and Additional Details: 

Profession/location: Night attendant at assisted living facility/Ohio; 
Alleged violation: Minimum wage; WHD Actions, Conclusions, and 
Additional Details: 
* A homeless woman receiving free room and board while working as a 
night attendant at a nursing home alleged her employer had failed to 
pay her wages for an entire year. 
* According to WHD, the employer admitted it had failed to pay any 
wages to the night attendant and considered the room and board to be 
pay, but stated it did not have any money to pay the back wages. 
* WHD dropped the case and advised the night attendant of her right to 
file a private lawsuit. 
* The employer was still in business as of June 2008. 

Profession/location: Pool maintenance technician/Florida; Alleged 
violation: Last paycheck ï¿½ minimum wage; WHD Actions, Conclusions, and 
Additional Details: 
* Pool maintenance technician alleged that he did not receive his final 
paycheck from his employer. 
* Employer admitted to the WHD investigator that they did not pay the 
employeeï¿½s last paycheck but refused to pay employee. 
* WHD dropped case and advised the worker of his right to file a 
private lawsuit. 

Profession/location: Cashier/Florida; 
Alleged violation: Last paycheck ï¿½ minimum wage; WHD Actions, 
Conclusions, and Additional Details: 
* Gasoline station cashier alleged he did not receive his final 
paycheck from his employer. 
* According to WHD, the employer agreed that it owed the cashier his 
last paycheck, but asked the WHD investigator to call back later to 
resolve the complaint. 
* WHD dropped the case after several subsequent calls to the employer 
were not returned. 
* WHD advised the cashier of his right to file a private lawsuit. 

Profession/location: Cook/Ohio; 
Alleged violation: Overtime pay; 
WHD Actions, Conclusions, and Additional Details: 
* Complainant alleged he was not paid for overtime. 
* Investigator did not perform any actions for 15 months citing a 
backlog of cases. 
* Investigation was dropped after 15 months when the investigator saw a 
news article showing that the business in question had closed. 

Source: GAO, WHD. 

[End of table] 

The investigations for these cases were inadequate for a variety of 
reasons. For example, investigators stated that some delays in 
investigating cases were caused by a backlog of complaints. In these 
cases by the time a complaint was assigned to an investigator, the 
statute of limitations for assessing back wages was close to expiring. 
In another instance an investigator stated that a thorough 
investigation was not performed because the complaint was filed 
anonymously. In addition, several investigators stated that because 
complaints were related to isolated issues, WHD did not normally 
perform a full investigation. Finally, for one last paycheck complaint, 
when asked about why a thorough investigation was not performed, the 
investigator simply stated it ï¿½was not a case.ï¿½ 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-973T]. For more 
information, contact Gregory D. Kutz at (202) 512-6722 or 
[email protected]. 

[End of section] 

Mr. Chairman and Members of the Committee: 

Thank you for the opportunity to discuss findings related to our 
ongoing investigation of the Department of Labor's (Labor) Wage and 
Hour Division (WHD) processes for investigating and resolving wage and 
hour complaints. Over 100 million workers are protected through WHD's 
enforcement of a number of labor laws--including the Fair Labor 
Standards Act (FLSA), the Migrant and Seasonal Agricultural Worker 
Protection Act, the Family and Medical Leave Act, the Davis Bacon Act, 
and other federal labor laws. WHD enforces labor laws governing issues 
such as minimum wage, overtime pay, child labor, and family medical 
leave. To ensure compliance, WHD uses a number of strategies including 
investigations, partnerships, and compliance assistance. Conducting 
investigations based on complaints received is WHD's first priority, 
but it also proactively initiates investigations in an effort to target 
businesses likely to violate labor laws. According to WHD, 
investigations can range from comprehensive investigations of employers 
covering all laws under the agency's jurisdiction to conciliations 
which consist primarily of phone calls to the complainant's employer. 
When WHD identifies violations, the agency assesses back wages to be 
paid to employees and can impose penalties and other sanctions against 
employers. 

As requested, this testimony highlights findings from our ongoing 
investigation of WHD's process for investigating and resolving wage and 
hour complaints. Specifically, this testimony will report on 15 cases 
we have identified from our ongoing work that show inadequate WHD 
investigations of wage and hour complaints. The 15 cases are ones where 
we performed sufficient work to allow conclusions to be drawn about the 
adequacy of WHD's investigation and resolution of complaints. We plan 
to continue our work in this area to determine if identified case 
studies are indicators of more systematic problems in WHD processes for 
investigating and resolving wage and hour complaints. A companion GAO 
testimony[Footnote 1] released today at this hearing discloses findings 
on trends in WHD investigations over the last 10 years. In addition, 
the testimony also provides findings detailing (1) a decrease in 
enforcement activities at WHD amidst a decrease in investigative staff, 
(2) WHD's failure to make effective use of its current compliance tools 
and strategies, and (3) the agency's inability to demonstrate 
performance results. 

To address our objectives, we obtained and analyzed closed case data 
from Labor's Wage and Hour Investigative Support and Reporting Database 
(WHISARD), which contained over 70,000 cases closed from October 1, 
2004, through September 30, 2007. To identify case studies, we data- 
mined WHISARD for instances in which a significant delay occurred in 
assigning a case to an investigator, instances where an employer could 
not be located, and instances where investigator notes indicated an 
inadequate investigation may have been performed. We obtained and 
analyzed WHD case files, interviewed WHD investigators and/or district 
managers who performed investigations of the complaints, and reviewed 
publicly available data and data from the Department of Treasury's 
Financial Crimes Enforcement Network to determine facts about the 
employers that had complaints filed against them. Case study findings 
are specific to each individual complaint and cannot be projected to 
the entire population of WHISARD cases. In addition to case study 
reviews, we also conducted interviews with officials from Labor and 
WHD, and conducted walkthroughs of WHD offices in Dallas and Houston, 
Texas. During the walkthroughs, we interviewed WHD investigators to 
determine the general process for investigations. We also interviewed 
numerous labor advocacy groups to determine their experiences while 
interacting with WHD. 

We performed our investigative work from January 2008 to July 2008 in 
accordance with standards prescribed by the President's Council on 
Integrity and Efficiency. 

Summary: 

Case studies show that WHD inadequately investigated complaints from 
low-wage and minimum wage workers alleging that employers failed to pay 
the federal minimum wage, required overtime, and failed to issue a last 
paycheck. In the majority of the case studies, low-wage complainants 
were advised of their option to hire an attorney after WHD determined 
no action would be taken on their behalf. Examples of inadequate WHD 
responses to complaints included instances where WHD (1) 
inappropriately rejected complaints based on incorrect information 
provided by employers, (2) failed to make adequate attempts to locate 
employers, (3) did not thoroughly investigate and resolve complaints, 
and (4) delayed initiating investigations for over a year and then 
dropped the complaint because the statute of limitations for assessing 
back wages was close to expiring.[Footnote 2] 

In one example, a delivery driver who was working 55 hours per week 
informed WHD that he was not receiving overtime pay as required. WHD 
waited more than 17 months before assigning an investigator to the 
complaint. The investigator subsequently dropped the case without 
performing any investigative actions. In another case study, an owner 
of a gasoline station agreed that a station cashier earning $7.50 per 
hour did not receive a paycheck, but told WHD to call back later to 
resolve the issue. The WHD investigator was unsuccessful in contacting 
the employer again and the complainant was informed that WHD was 
dropping the case and his only option was to hire an attorney. In 
another case study, WHD investigated a complaint and found thousands of 
dollars in back wages were owed to a homeless employee working as a 
night attendant at an assisted living facility. However, because the 
facility owners stated in August 2006 that they were unable to pay the 
back wages, WHD dropped the case and advised the homeless complainant 
to explore her right to file a private lawsuit. This assisted living 
facility was still operating as of June 2008, but the complainant no 
longer works at the facility. WHD investigators stated some complaints 
were inadequately investigated because of a backlog of complaints, 
because a complaint was filed anonymously, and because complaints were 
related to isolated issues. 

We data-mined WHD's WHISARD database and found thousands of cases with 
characteristics similar to the case studies we reviewed. For example, 
we found more than 16,000 cases, called conciliations,[Footnote 3] 
which were similar to some of our case studies because they were opened 
and closed within 3 days. In addition, we found more than 100 cases 
that were closed because WHD could not locate an employer, and hundreds 
of cases that were assigned to an investigator more than a year after 
the complaint was received. We have not performed additional work on 
these complaints to determine if the complaints were valid or if 
actions taken by WHD were appropriate. 

WHD Inadequately Investigated and Resolved Complaints: 

We found that in all of the case studies reported in this testimony, 
WHD inadequately investigated complaints. We identified case studies 
where initial screening by WHD officials incorrectly rejected valid 
complaints due to reliance on documentation provided by employers, WHD 
failed to locate employers implicated in complaints, and WHD's 
investigations were limited to phone calls made to the complainant's 
employer. We also found examples of complaints that WHD did not attempt 
to investigate for over a year, eventually dropping the case because 
the statute of limitations was close to expiring. Table 1 provides a 
summary of 10 of our case studies closed by WHD between October 1, 
2004, and September 31, 2007. An additional 5 case studies are 
summarized in appendix II. 

Table 1: Case Studies of Inadequate WHD Investigations: 

Case: 1; 
Type of business/employee profession: Restaurant/cashier; 
Type of alleged violation: Minimum wage and overtime (FLSA); 
Employer location: Austin, Texas; 
WHD actions, conclusions, and additional details: 
* Complainant alleged she was not paid for overtime; 
* WHD contacted employer and requested annual sales documentation to 
determine if federal laws covered the complaint; 
* WHD reviewed the employer's documentation and subsequently dropped 
the case because documents provided showed the business' annual sales 
did not exceed the $500,000 threshold required for federal law to 
apply; 
* Seven employees, including the complainant, privately sued the 
employer in federal court; 
* The employees' attorney found that the employer had sales in excess 
of $500,000 annually; 
* 4 of the 7 employees reached an undisclosed settlement with the 
employer. 

Case: 2; 
Type of business/employee profession: Farming and trucking/truck 
driver; 
Type of alleged violation: Child labor (FLSA); 
Employer location: Hamilton, Texas; 
WHD actions, conclusions, and additional details: 
* Complainant alleged possible child labor violations involving 
children operating large machinery; 
* According to WHD records, investigators attempted to locate employer 
through internet and phone book searches, but dropped the case because 
the employer could not be located; 
* Our public records searches easily identified a company with a 
similar name in the same town as indicated in the complaint; 
* We confirmed the existence of the employer through phone calls to the 
business found in public records searches. 

Case: 3; 
Type of business/employee profession: Alcohol distributor/delivery 
driver; 
Type of alleged violation: Overtime pay (FLSA); 
Employer location: Lorton, Virginia; 
WHD actions, conclusions, and additional details: 
* Complainant alleged he was not paid for overtime; 
* Investigator was assigned to the case 17 months after complaint was 
received; 
* Investigator was unable to contact the complainant after the 17 month 
delay; 
* Investigator dropped the complaint after 6 additional months due to 
the possible expiration of the statute of limitations; 
* We successfully contacted the employer through a telephone call; 
* Public records show this company is within WHD's jurisdiction with 
100 employees and over $25 million in annual net sales. 

Case: 4; 
Type of business/employee profession: Government contractor/plumber; 
Type of alleged violation: Prevailing wage (Davis Bacon and Related 
Acts); 
Employer location: Beltsville, Maryland; 
WHD actions, conclusions, and additional details: 
* Complainant alleged company was misclassifying employees, resulting 
in lower wages; 
* Complainant alleged he was owed over $7,000 in back wages; 
* Investigator was assigned to the case 18 months after complaint was 
received; 
* Investigator dropped the complaint shortly after it was assigned 
because the statute of limitations had expired. 

Case: 5; 
Type of business/employee profession: Restaurant/cook; 
Type of alleged violation: Overtime pay (FLSA); 
Employer location: Cleveland, Ohio; 
WHD actions, conclusions, and additional details: 
* Complainant alleged he was not paid for overtime; 
* Investigator did not perform any actions for 15 months citing a 
backlog of cases; 
* Investigation was dropped after 15 months when the investigator saw a 
news article showing that the business in question had closed. 

Case: 6; 
Type of business/employee profession: Security company/security guard; 
Type of alleged violation: Minimum wage and overtime pay (FLSA); 
Employer location: Puerto Rico; 
WHD actions, conclusions, and additional details: 
* Two complaints were filed against an employer alleging the business 
was failing to pay minimum wage and overtime; 
* Investigation was open for 2 years after first complaint was received 
with no investigative actions taken; 
* According to WHD's database, no work was performed and both cases 
were closed because the investigation had been inactive. 

Case: 7; 
Type of business/employee profession: Gasoline station/cashier; 
Type of alleged violation: Last paycheck - minimum wage (FLSA); 
Employer location: Tamarac, Florida; 
WHD actions, conclusions, and additional details: 
* Complainant alleged she did not receive her final paycheck from the 
employer; 
* Employer agreed with WHD investigator that wages were owed and asked 
the investigator to call back later; 
* According to WHD, the case was dropped when subsequent calls to the 
employer were not answered or returned; 
* We successfully contacted this employer and confirmed that it is 
still in business as of June 2008; 
* The complainant was advised of her right to file a private lawsuit. 

Case: 8; 
Type of business/employee profession: Assisted living facility/night 
staff; 
Type of alleged violation: Minimum wage (FLSA); 
Employer location: Toledo, Ohio; 
WHD actions, conclusions, and additional details: 
* Complainant alleged nonpayment for work performed for over a year; 
* Employer admitted to WHD that it had failed to pay a homeless 
employee over $4,000 for over 1 year of work, but stated it considered 
the free room and board provided to be pay; 
* According to WHD, the investigation was dropped after the employer 
informed WHD in August 2006 that it did not have the money to pay back 
wages; 
* As of June 2008 this employer is still in business; 
* The complainant was advised of her right to file a private lawsuit. 

Case: 9; 
Type of business/employee profession: Property management company/pool 
maintenance technician; 
Type of alleged violation: Last paycheck - minimum wage (FLSA); 
Employer location: Sanibel, Florida; 
WHD actions, conclusions, and additional details: 
* Complainant alleged that he did not receive his final paycheck from 
the employer; 
* According to WHD, the employer admitted to the WHD investigator that 
it did not pay the employee's last paycheck; 
* Employer berated the WHD investigator and said that the employee 
would not be paid; 
* The case was dropped and the complainant was advised of his right to 
file a private lawsuit. 

Case: 10; 
Type of business/employee profession: Swimming pool company/office 
manager; 
Type of alleged violation: Last paycheck - minimum wage (FLSA); 
Employer location: Fort Lauderdale, Florida; 
WHD actions, conclusions, and additional details: 
* Complainant alleged that she did not receive her final paycheck from 
the employer; 
* According to WHD, the investigator made telephone calls to the 
employer but did not receive a response; 
* Investigator stated that no further work was performed on the 
complaint because it "was not a case"; 
* The case was dropped and the complainant was advised of her right to 
file a private lawsuit; 
* We confirmed the existence of this employer through its own Web site 
and phone calls to the business. 

Source: GAO, WHD. 

[End of table] 

The following provides additional details on selected case studies 
summarized in table 1. 

* Case Study 1: WHD received a complaint in August 2005 alleging that a 
fast food chicken restaurant was not paying overtime to employees. WHD 
requested information on the employer's annual sales in order to 
establish coverage under FLSA.[Footnote 4] The employer's bookkeeper 
told WHD that the business was a sole proprietorship, that the owner 
only owned two restaurant locations, and provided documents showing the 
business's annual sales were under $500,000. WHD did not conduct an 
independent verification of the annual sales information, and did not 
follow up on its research that identified other restaurants with the 
same name found in the local phone book. WHD subsequently dropped the 
case because it concluded there was no coverage under FLSA. We 
identified that at the time of the complaint a limited liability 
corporation with the same owner and name as the restaurant was in 
existence with more than two locations. Also in August 2005, seven 
individuals, including the complainant, filed a lawsuit against the 
restaurant and its owner in federal court for allegedly violating their 
minimum wage and overtime rights. As the case progressed, the 
plaintiffs' legal counsel provided evidence that the restaurant had 
more than two locations and over $500,000 in annual sales. Four of the 
affected employees reached an undisclosed settlement with the employer. 

* Case Study 2: WHD received an anonymous complaint alleging disabled 
boys were being paid cash to drive trucks in a small town in Texas. WHD 
officials stated that they normally do not respond to anonymous 
complaints due to resource constraints. However, for this case WHD 
decided to investigate because this complaint potentially related to a 
child labor violation. In an attempt to locate the employer, a WHD 
investigator performed an internet search and located a business going 
by a similar name and listed as a farm instead of being listed as a 
trucking company as the complaint indicated. Next, the WHD investigator 
attempted to locate the business in the local phone book, but 
accidentally searched in a phone book for a town over 100 miles away. 
WHD then dropped the case because the employer could not be found 
without searching other databases or calling the business with the 
similar name. However, we located and called the business, and 
confirmed that it was in fact a trucking company. Public records 
searches also revealed that there were two businesses owned by the same 
individual in that town and one of those listing a similar name as the 
complaint specified was classified as a trucking company. 

* Case Study 3: WHD received a complaint from a delivery truck driver 
alleging his employer, an alcohol distributor, was not paying him for 
overtime. The investigation was assigned to a WHD investigator over 17 
months after the complaint was received. WHD told us that the delay was 
due to a complaint backlog caused by a lack of agency resources. The 
case was open for several months with only minimal work conducted. WHD 
determined no further action could be taken on the complainant's behalf 
due to the potential expiration of the 2-year statute of limitations 
period and the inability to make contact with the employee. WHD took no 
further action to determine whether the company was also not paying 
overtime to its other employees. Using publicly available information, 
we contacted the company and confirmed its existence. The company also 
falls within WHD's jurisdiction, with annual sales of over $25 million 
according to public records. 

* Case Study 7: WHD received a complaint in July 2007 alleging that a 
gasoline station did not pay a cashier minimum wage. The WHD 
investigator assigned to this case contacted a co-owner of the business 
who admitted that the complainant had not been paid in full, but stated 
that nothing could be done until his partner returned in 5 days. The 
WHD investigator contacted the business after 5 days but did not 
receive a response from the owners. As a result, the investigator 
closed the case without recording a violation. The investigator told us 
that she did not record a violation because the co-owner did not 
specify how much money was owed to the complainant. WHD took no further 
action on this case and informed the complainant of his right to file a 
private lawsuit. 

* Case Study 8: WHD received a complaint in May 2006 from a homeless 
individual alleging that a nonprofit assisted living facility that 
provides care for adults with developmental problems did not pay her 
over 1 year's worth of wages for supervising its residents. WHD 
initiated an investigation of this business and was told by the owners 
that because the employee was homeless, they believed they were 
providing a service by giving free room and board in exchange for work 
performed. However, the owners were informed that the employee was 
required to be paid minimum wage regardless of the housing arrangements 
provided. In July 2006, the owners' attorney agreed that the owners 
owed thousands of dollars in back wages. The WHD investigator then 
calculated an estimated $4,500 of back wages due to the complainant. 
However, 1 month later the owners stated they did not have the income 
to pay back wages. As a result, WHD closed the investigation with no 
further action and informed the complainant that she had the right to 
file a private lawsuit. WHD determined that no action would be taken to 
refer the employer to any type of collection activity because that 
would require litigation, which was deemed not appropriate for this 
investigation. Public records and telephone calls confirmed that the 
employer was still in business as of June 2008. The complainant no 
longer works at the facility. 

Thousands of cases within WHD's WHISARD database contain 
characteristics similar to some of the case studies shown in table 1 
and Appendix II. For example, we identified several case studies, often 
relating to complaints concerning employees not being paid their last 
paycheck, where WHD failed to perform substantive investigations. In 
these cases, WHD investigators only telephoned employers in an attempt 
to recover back wages for the complainant. WHD classifies these cases 
as conciliations and routinely limits its work to a phone call on 
behalf of the complainant. If the employer disagreed with the 
complaint, did not return phone calls, or stated some other reason for 
failing to issue an employee's last paycheck, WHD routinely dropped 
these cases and advised complainants of their right to file a private 
action lawsuit. Case study 10 in table 1 and case studies 12 and 13 in 
Appendix II all relate to conciliations performed by WHD investigators. 
Analysis of the WHISARD database found over 35,000 conciliations were 
performed by WHD in the last 3 fiscal years, and at least 16,000 of 
those cases were assigned to an investigator and closed within 3 days. 
We do not know, however, the extent to which these complaints were 
valid or whether the closures were appropriate. Case study 10 in table 
1 and case studies 12 and 13 in Appendix II were conciliations, and 
were also assigned to an investigator and closed within 3 days. 

Analysis of the WHISARD database also found over 2,000 cases similar to 
case study 1 in which WHD determined that federal labor laws did not 
apply to a complaint based on documentation provided by the 
complainant's employer. For case study 1, WHD data showed that the case 
was dropped by WHD because it determined federal laws did not cover the 
employee. Our analysis of WHD's WHISARD database identified over 2,000 
examples where a case was closed by WHD because it determined there was 
no coverage of the complaint under federal labor laws. We do not know 
the extent to which the WHD conclusions were appropriate. In addition, 
our analysis of WHD's WHISARD database identified over 100 cases 
similar to case study 2 . Case study 2 describes a complaint where WHD 
failed to make adequate attempts to locate an employer and in the end 
dropped the case because it was unable to locate the employer. We do 
not know the extent to which WHD's closure of the more than 100 
identified cases was appropriate. 

Finally, analysis of WHD data found hundreds of cases similar to 
several of our case studies involving delays in investigating 
complaints. For case studies 3 and 4 detailed above and case study 14 
in Appendix II, WHD failed to assign an investigator to a complaint 
until over 1 year after a complaint was filed. WHD subsequently dropped 
one of these cases after it determined that the statute of limitations 
on collecting back wages for the employees had expired. Through data- 
mining of WHD records we found 350 examples of additional complaints 
being assigned to an investigator over 12 months after a complaint was 
received. 

Mr. Chairman and Members of the Committee, this concludes my statement. 
I would be pleased to answer any questions that you or other members of 
the committee may have at this time. 

GAO Contacts: 

For further information about this testimony contact Gregory Kutz at 
(202) 512-6722 or [email protected] or Jonathan Meyer at (214) 777-5766 or 
[email protected]. 

[End of section] 

Appendix I: Scope and Methodology: 

To identify and investigate examples of inadequate Department of Labor 
(Labor) Wage and Hour Division (WHD) investigations we conducted 
interviews with officials from Labor and WHD. We also conducted 
walkthroughs of WHD offices in Dallas and Houston, Texas, and 
interviewed WHD investigators to determine the general process for 
investigations. We interviewed an individual who had made allegations 
to the committee concerning problems within WHD and their processes for 
investigating and resolving complaints. In addition, we interviewed 
numerous labor advocacy groups to determine their experiences while 
interacting with WHD. To identify macro-level data on WHD complaints, 
we obtained and analyzed closed case file data from Labor's Wage and 
Hour Investigative Support and Reporting Database (WHISARD) for cases 
closed between October 1, 2004 and September 30, 2007. WHISARD data was 
determined to be sufficiently reliable for the proposes of our work. To 
identify case studies, we data-mined WHISARD for cases with 
characteristics such as significant delays in assigning cases to an 
investigator, instances where an employer could not be located, and 
instances where investigator notes indicated an inadequate 
investigation was performed. We then obtained and analyzed WHD case 
files, interviewed WHD investigators and/or district managers who 
performed investigations of the complaints, and reviewed publicly 
available data and data from the Department of Treasury's Financial 
Crimes Enforcement Network in order to determine facts about the 
employers that had complaints filed against them. Finally, we obtained 
information from one complainant's legal counsel concerning closed 
litigation of suits filed related to labor law violations. Our findings 
from these case studies cannot be projected to the entire population of 
WHISARD case files. 

[End of section] 

Appendix II: Additional Case Studies of Inadequate WHD Investigations: 

Table 2 provides a summary of five additional case studies of 
inadequate Wage and Hour Division (WHD) investigations. These case 
studies show instances where WHD dropped cases after employers failed 
to return phone calls, instances where WHD identified violations but 
failed to force employers to pay employees their owed wages, and 
instances where WHD failed to follow up with complainants to ensure 
back wages were paid. 

Table 2: Additional Case Studies of Inadequate WHD Investigations: 

Case: 11; 
Type of business/employee profession: Garment contractor/shirt labeler; 
Type of alleged violation: Minimum wage, overtime, and 
recordkeeping(FLSA); 
Employer location: Santa Fe Springs, California; 
WHD actions, conclusions, and additional details: 
* Complainant alleged employer failed to pay overtime; 
* WHD determined that over $60,000 in overtime and minimum wage back 
wages were due to 24 employees; 
* Employer was a repeat offender - WHD conducted one previous 
investigation against this employer and one previous investigation 
against a company with the same owner and uncovered over $28,000 in 
back wages due; 
* WHD was informed that the company was changing its name and was 
unable to make final contact with the owner; 
* The complainant was informed that no further action would be taken 
related to the $60,000 in unpaid wages; 
* The investigation was closed and the complainant was advised of her 
right to file a private lawsuit. 

Case: 12; 
Type of business/employee profession: Trucking/truck driver; 
Type of alleged violation: Last paycheck - minimum wage (FLSA); 
Employer location: Joliet, Illinois; 
WHD actions, conclusions, and additional details: 
* Complainant alleged that he did not receive his final paycheck from 
the employer; 
* WHD called the employer who stated that the complainant had been 
paid, but refused to provide proof of payment; 
* Employer terminated two subsequent telephone calls; 
* The investigation was dropped and the complainant was advised of his 
right to file a private lawsuit; 
* WHD records did not indicate any work was done to determine if the 
complainant was paid. 

Case: 13; 
Type of business/employee profession: Staffing company/certified 
nursing assistant; 
Type of alleged violation: Last paycheck/minimum wage (FLSA); 
Employer location: Delray Beach, Florida; 
WHD actions, conclusions, and additional details: 
* Complainant earning $9.00 per hour alleged nonpayment of $1,500; 
* WHD left messages on the employer's answering machine on 2 separate 
days without a response; 
* The investigation was dropped and the complainant was advised of her 
right to file a private lawsuit. 

Case: 14; 
Type of business/employee profession: Refuse company/laborer; 
Type of alleged violation: Overtime pay (FLSA); 
Employer location: Triangle, Virginia; 
WHD actions, conclusions, and additional details: 
* Complainant alleged he was not paid overtime; 
* Investigator was assigned to the case approximately 18 months after 
complaint was received; 
* WHD attempted to contact the complainant, but was unsuccessful; 
* WHD sent a letter to the complainant giving him 10 days to respond 
before his complaint was dropped; 
* WHD closed the case after no response was received from the 
complainant. 

Case: 15; Type of business/employee profession: Design company/painter; 
Type of alleged violation: Minimum wage (FLSA); 
Employer location: New York City, New York; 
WHD actions, conclusions, and additional details: 
* Three employees alleged that they were not paid for 4 weeks of work; 
* Employer informed WHD that the workers would not be paid their 
legally due wages because they were not legal U.S. citizens; 
* WHD informed the employer that the individuals are required to 
receive payment for work performed regardless of legal status; 
* According to WHD, the employer still refused to pay the complainants; 
* WHD subsequently dropped the case; 
* WHD sent a letter to the three complainants informing them of their 
right to file a private lawsuit. 

Source: GAO, WHD. 

[End of table] 

[End of section] 

Footnotes: 

[1] GAO, Fair Labor Standards Act: Better Use of Available Resources 
and Consistent Reporting Would Improve Compliance, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-08-962T]. (Washington, D.C.: July 
15, 2008) 

[2] The statute of limitations for recovery of wages under the Fair 
Labor Standards Act and the Davis Bacon Act is 2 years from the 
employer's failure to pay the correct wages. 29 U.S.C. ï¿½ 255. For 
willful violations, in which the employer knew its actions were illegal 
or acted recklessly in determining the legality of its actions, the 
statute of limitations is 3 years. Federal courts have enforced the 
statute of limitations even if the Department of Labor is investigating 
a complaint. Shandelman v. Schuman, 92 F. Supp. 334 (E.D.Pa. 1950). 

[3] Conciliations are generally limited to a single violation, such as 
a missed paycheck, for a single worker. Investigative work is generally 
limited to a telephone conversation between a WHD investigator and an 
employer. 

[4] The protections of the Fair Labor Standards Act apply to employees 
engaged in interstate commerce or in the production of goods for 
interstate commerce. The act also applies to all employees of an 
enterprise that has at least $500,000 in annual sales or business and 
has employees engaged in interstate commerce or in the production of 
goods for interstate commerce, or that has employees handling, selling, 
or otherwise working on goods or materials that have been moved in or 
produced for interstate commerce by any person. 29 U.S.C. ï¿½ 203. Even 
though an enterprise may have separate locations, it is considered a 
single enterprise for the $500,000 coverage determination if related 
activities are performed through unified operation or common control by 
any person or persons for a common business purpose. 

[End of section] 

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