GAO Investigation Finds Labor Department Not Effectively Fighting Wage Theft
Department not using all its tools to collect back wages

Tuesday, July 15, 2008

WASHINGTON, DC -- Two separate government investigations unveiled today indicate that the U.S. Department of Labor is failing to effectively enforce the nation’s wage and hour laws.

The U.S. Government Accountability Office, which conducted the investigations at the request of House Education and Labor Committee Chairman George Miller (D-CA), testified about the findings at a committee hearing today.

The two investigations found that the Wage and Hour Division of the Labor Department – the agency responsible for investigating complaints of wage, hour, and child labor violations – is failing to fully investigate and properly address violations of the law.

The GAO concluded that the agency “does not sufficiently leverage its existing tools to increase compliance.”

“Although the Department of Labor has the necessary tools to fight wage theft, the GAO investigation suggests that the problem of wage theft is only getting worse because of weaker enforcement,” said Miller. “In too many cases, the Wage and Hour Division has simply dropped the ball in pursuing employers that cheat its workers out of their hard earned wages.”

The GAO calculated that actions initiated by the Department on wage and hour violations have dropped from approximately 47,000 in 1997 to fewer than 30,000 in 2007. And, the use of fines that punish repeat or egregious offenders declined by nearly 50 percent from 2001 to 2007.

The GAO’s investigation also found that thousands of cases may have been mishandled by the agency over the past decade, which may have resulted in workers receiving reduced or no back pay at all. The investigation cited 15 case studies that exemplified what the GAO claims as the failures to fully investigate and properly address worker complaints. The GAO will continue to investigate these claims.

In one case, the GAO uncovered that the Wage and Hour Division dropped investigations when employers refused to pay or claimed no funds to pay back wages, even though the business was still in operation. Although the agency has the ability to take employers to court in order to force recalcitrant employers to issue back pay, the agency refused to do so in most cases.

The GAO also found hundreds of cases where the agency did not assign an investigator for more than a year after the initial complaint. It cited one example where a truck driver who was not paid for overtime had to wait for 17 months to be assigned an investigator. The case against the truck driver’s employer was dropped because the agency could no longer locate the truck driver.

According to Kim Bobo, the founder and executive director of Interfaith Workers Justice, millions of workers in the U.S. face some sort of wage theft every year.

“Wage theft is bad for America,” said Bobo, whose organization assists workers in recovering wages stolen by employers. “It hurts workers and their families, places ethical employers at a competitive disadvantage, robs resources from public coffers in unpaid taxes, and denies communities of the economic stimulus provided by wages spent in local communities.”

To read full the results of the GAO investigation, click here.

To read the case studies still being investigated, click here.

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