Fair Labor Standards Act:

Better Use of Available Resources and Consistent Reporting Could Improve Compliance

GAO-08-962T: Published: Jul 15, 2008. Publicly Released: Jul 15, 2008.

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Over 130 million workers are protected from substandard wages and working conditions by the Fair Labor Standards Act (FLSA). This act contains specific provisions to ensure that workers are paid the federal minimum wage and for overtime, and that youth are protected from working too many hours and from hazardous conditions. The Department of Labor's Wage and Hour Division (WHD) is responsible for enforcing employer compliance with FLSA. To secure compliance, WHD uses enforcement actions, partnerships with external groups, and outreach activities. In response to a congressional request, we examined (1) the trends in FLSA compliance activities from fiscal years 1997 to 2007, (2) the effectiveness of WHD's efforts to plan and conduct these activities, and (3) the extent to which these activities have improved FLSA compliance.

From fiscal years 1997 to 2007, the number of WHD's enforcement actions decreased by more than a third, from approximately 47,000 in 1997 to just under 30,000 in 2007. According to WHD, the total number of actions decreased over this period because of three factors: the increased use of more time-consuming comprehensive investigations, a decrease in the number of investigators, and screening of complaints to eliminate those that may not result in violations. Most of these actions (72 percent) were initiated from 1997 to 2007 in response to complaints from workers. The remaining enforcement actions, which were initiated by WHD, were concentrated in four industry groups: agriculture, accommodation and food services, manufacturing, and health care and social services. WHD's other two types of compliance activities--partnerships and outreach--constituted about 19 percent of WHD's staff time based on available data from 2000 to 2007. WHD did not effectively take advantage of available information and tools in planning and conducting its compliance activities. In planning these activities, WHD did not use available information, including key data on complaints and input from external groups such as employer and worker advocacy organizations, to inform its planning process. Also, in targeting businesses for investigation, WHD focused on the same industries from 1997 to 2007 despite information from its commissioned studies on low wage industries in which FLSA violations are likely to occur. As a result, WHD may not be addressing the needs of workers most vulnerable to FLSA violations. Finally, the agency does not sufficiently leverage its existing tools, such as tracking the use and collection of penalties and back wages, or using its hotlines and partnerships, to encourage employers to comply with FLSA and reach potential complainants. The extent to which WHD's activities have improved FLSA compliance is unknown because WHD frequently changes both how it measures and how it reports on its performance. When agencies provide trend data in their performance reports, decision makers can compare current and past progress in meeting long-term goals. While WHD's long-term goals and strategies generally remained the same from 1997 to 2007, WHD often changed how it measured its progress, keeping about 90 percent of its measures for 2 years or less. Moreover, WHD established a total of 131 performance measures throughout this period, but reported on 6 of these measures for more than 1 year. This lack of consistent information on WHD's progress in meeting its goals makes it difficult to assess how well WHD's efforts are improving compliance with FLSA.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: WHD reported that it has been leveraging resources effectively, as demonstrated in increases in recoveries and number of workers receiving back wages. To the extent that WHD's partners are not adhering to expected practices regarding the transmittal or referral of complaints, the agency will seek to revisit those relationships and improve performance or dissolve the relationship, if necessary. In FY 2012, Labor stated that this is still an on-going effort and that its partnership program was redefined with the September 2011 launch of the Department's Misclassification Initiative. Under this initiative, Labor signed a memorandum of understanding with the Internal Revenue Service which stated that the agencies will work together and share information to reduce the incidence of misclassification of employees, to help reduce the tax gap, and to improve compliance with federal labor laws. Furthermore, WHD has signed related agreements with several state labor commissions and other agencies to share information in order to level the playing field for law-abiding employers and to ensure that employees receive the protections to which they are entitled under federal and state law. According to Labor, employers who misclassify workers may not be paying proper overtime compensation, workers' compensation premiums and federal taxes that support workers.

    Recommendation: To more effectively plan and conduct its compliance activities, the Secretary of Labor should direct the Administrator of WHD to identify ways to leverage its existing tools by improving services provided through hotlines, office phone lines, and partnerships, and improving its tracking of whether penalties are assessed when repeat or willful violations are found and whether back wages and penalties assessed are collected.

    Agency Affected: Department of Labor

  2. Status: Closed - Implemented

    Comments: In 2008, WHD noted that this is already its longstanding practice; the authors of the various studies have presented their analyses to the Executive Leadership Team, the Regional Planning and Review Officers, and district office managers on multiple occasions. However, GAO's testimony found that, although commissioned studies mentioned 33 industries with a high potential for violations, nine were ranked the highest nationally, and WHD has not substantially changed its focus towards investigations regarding these nine industries. In May 2010, WHD received a commissioned study which recommended 11 priority industries for strategic enforcement. In its FY 2012 and 2013 budget justification, WHD mentioned plans to use its resources for directed investigations in 6 of these industries (and two others not listed) and mentioned the commissioned study in the justification for both years.

    Recommendation: To more effectively plan and conduct its compliance activities, the Secretary of Labor should direct the Administrator of WHD to incorporate information from its commissioned studies in its strategic planning process to improve targeting of employers for investigation.

    Agency Affected: Department of Labor

  3. Status: Closed - Implemented

    Comments: According to WHD, Wage and Hour revised its planning process to ensure that regional and district offices incorporate stakeholder input into its annual plan. WHD has established a process to better document its review and consideration of stakeholder input into the planning process. Furthermore, in several district offices, WHD reported having Community Outreach and Resource Planning Specialists whose principal responsibilities are conducting outreach to external stakeholders for the purposes of collecting input and providing information. Officials stated that these specialists also are engaged in the planning process. Agency documentation used for FY 2012 training sessions for these specialists contains details on how to incorporate stakeholders into the local strategic planning and agency communications process.

    Recommendation: To more effectively plan and conduct its compliance activities, the Secretary of Labor should direct the Administrator of WHD to establish a process to help ensure that input from external stakeholders, such as employer associations and worker advocacy groups, is obtained and incorporated as appropriate into its planning process.

    Agency Affected: Department of Labor

  4. Status: Closed - Not Implemented

    Comments: In 2008, the Department of Labor's Wage and Hour Division (WHD) indicated that it planned to pilot the collection of information on all "complaints" (using GAO's definition) at a district office. In June 2009, WHD reported that its policy is to enter into its WHISARD database, and maintain a record of, all complaints for which there is sufficient information to indicate that a wage and hour violation has occurred or may be occurring. However, GAO views "complaints" as encompassing all concerns about working conditions that are reported to WHD - not just those with sufficient information - and we believe WHD can collect all of this information. In FY 2012, Labor stated that it does not plan to take additional steps to address this recommendation because officials believe they have been sufficiently responsive.

    Recommendation: To more effectively plan and conduct its compliance activities, the Secretary of Labor should direct the Administrator of WHD to enter all complaints and actions taken in response to complaints in its Wage and Hour Investigator Support and Reporting Database (WHISARD) database, and use this information as part of its resource allocation process.

    Agency Affected: Department of Labor

  5. Status: Closed - Not Implemented

    Comments: In prior years, WHD reported that it has three performance measures that reflect its three enforcement priorities: complaint management, low-wage industry compliance, and reduced recidivism. WHD reported that it continued to track a combination of performance indicators for internal management and accountability. With the exception of the recidivism measure, these indicators are not statute-specific. Although WHD believed it has addressed this recommendation, GAO needed evidence that these measures are maintained and reported on consistently, i.e., for more than just one year. In fiscal year 2012, Labor stated WHD has revised its performance measures based on the department's strategic plan for FY 2011-2016. In its FY 2011 annual performance report, three WHD-related performance measures for FLSA enforcement in the janitorial, hotel/motel and construction industries were mentioned. At that point, a baseline for compliance in the janitorial industry was established, with the hotel/motel and construction to follow in FY 2012. More recent annual performance reports were not available at this time to confirm the consistency of WHD's or the department's reporting. Although officials stated that the department continues to maintain data supporting hundreds of WHD performance measures, it is not clear that these measures have been consistent from year to year.

    Recommendation: To provide better accountability in meeting its goal of improving employer compliance, the Secretary of Labor should direct the Administrator of WHD to establish, consistently maintain, and report on its performance measures for FLSA.

    Agency Affected: Department of Labor

 

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