Minimum Wages & Overtime Pay:

Change in Statute of Limitations Would Better Protect Employees

HRD-92-144: Published: Sep 22, 1992. Publicly Released: Sep 22, 1992.

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Pursuant to a congressional request, GAO reviewed the Fair Labor Standards Act (FLSA), focusing on: (1) the legislative history of the Portal-to-Portal Act; (2) Department of Labor Wage and Hour Division (WHD) estimates of the extent to which it obtained waivers of the statute of limitations in fiscal year 1991 FLSA back wage cases; and (3) a case study of Labor's 1986-1987 investigation of a grocery store chain.

GAO found that: (1) the FLSA statute of limitations differs from the statutes of limitations for some other labor laws because different actions toll the statutes of limitations; (2) under the Portal-to-Portal Act, the statute of limitations tolls only when a suit is filed in court; (3) the amount of back wages employers are required to pay for a violation under FLSA can decrease while Labor investigates cases and negotiates with employers; (4) employers rarely agree to waive the statute of limitations for FLSA cases; (5) most waivers are obtained because employers request to pay back wages on an installment basis; (6) obtaining a waiver does not guarantee that employees will be protected from losing back wages as a result of their claims expiring under the statute of limitations; (7) in a 1986-1987 investigation, three grocery store employees lost back wages because their claims expired under the statute of limitations; (8) during the 2-year period the chain agreed to waive the statute of limitations, none of the employees involved in the investigation lost back wages as a result of their claims expiring; (9) the chain paid less than 25 percent of the back wages WHD investigators determined were owed; (10) in the case study, the amounts entered into the WHD management information system led to a substantial overstatement of the recovery rate for the case; and (11) information obtained from Labor officials indicates that overstatements may have happened in other cases.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Legislative action is not intended.

    Matter: Congress should amend the Portal-to-Portal Act so that its statute of limitations tolls: (1) when a complaint is filed with Labor (for employees who file complaints); or (2) at the date Labor notifies an employer of the start of its investigation (for employees who do not file complaints but are found by Labor to be owed back wages).

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: The Wage and Hour Division has alerted all regional and district office personnel about the importance of entering accurate data into its management information database and the need to take additional care when recording back wage data into the system.

    Recommendation: The Secretary of Labor should: (1) assess the extent of inaccuracies in the amounts entered as back wages owed to employees (findings) in Wage and Hour Division Management Information System; and (2) take appropriate action to correct problems identified.

    Agency Affected: Department of Labor

 

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