Members of the House Education and Labor Committee expressed shock and anger after an undercover investigation of the government agency responsible for enforcing federal wage and hour and child labor laws uncovered evidence of negligence, incompetence and dishonesty among the agency’s employees.

Investigators from the U.S. Government Accountability Office (GAO) examined the operations of the Department of Labor’s Wage and Hour Division (WHD) for approximately nine months. The evidence collected by the investigators and the report released by the GAO during a hearing on March 25, 2009, left several members of the House committee flabbergasted.

“Those most vulnerable to wage theft are likely bearing the brunt of our nation’s economic crisis,” said Rep. George Miller, D-Calif., chair of the committee, who requested the investigation. “We owe it to all hard-working Americans to ensure that we correct the incompetence of the Bush administration and ensure families are not being cheated out of their wages by unscrupulous employers.”

Beginning in July 2008, the GAO investigators filed 10 fictitious complaints with district offices of the Wage and Hour Division across the country, posing alternately as employees and employers. Of the complaints, only one was resolved. The GAO tracked the progress of the complaints until March 2009 and found after reviewing the agency’s complaint database that only five the 10 fictitious complaints were logged into the agency’s system, and then only after weeks had passed.

In addition, the GAO investigators audited the WHD’s database, sampling several dozen cases to determine whether they were handled properly. As was the case with the undercover calls, when employers declined to pay back wages, even if they admitted wages were owed, WHD investigators tended to not pursue the investigation and to inform complainants that they had the right to file private lawsuits.

‘Left … with Nowhere to Turn’

“This investigation clearly shows that the Department of Labor has left thousands of actual victims of wage theft who sought federal government assistance with nowhere to turn,” said Gregory Kutz, managing director of forensic audits and special investigations for the GAO. “Far too often, many of America’s most vulnerable workers find themselves dealing with an agency concerned about resource limitations, with ineffective processes, and without certain tools necessary to perform timely and effective investigations of wage-theft complaints. Unfortunately, far too often the result is unscrupulous employers taking advantage of our country’s lower-wage workers.”

Kutz told the committee members that the GAO estimates that 19 percent of complaints filed every year with the Wage and Hour Division are not investigated properly. During fiscal year 2008, Kutz said, more than 30,000 complaints were filed with the agency.

“But this doesn’t count the several thousand complaints that were completely ignored or never filed properly by the division,” Kutz said.

Rep. Buck McKeon, R-Calif., the senior minority member of the committee, challenged Miller’s contention that the failures of the Wage and Hour Division had political implications or could be blamed on one particular president’s administration. McKeon also raised the question why no official with the Labor Department was present during the committee hearing to respond directly to the GAO’s allegations.

“I don’t know why we are here to beat up on the Department of Labor when there’s no one here from the department to respond directly to these questions,” McKeon said. “And I don’t see what purpose it serves, if we are here just to beat up on the Bush administration.”

Miller stated during the hearing that his office had contacted officials with the Labor Department about the hearing but his office was told that because of the recent transition with the Obama administration, no high-level appointees were available or able to comment on the situation.

Labor Secretary Hilda Solis did issue a written statement after the GAO presented its findings to the committee.

“I take the issues raised by the Government Accountability Office investigation regarding past Wage and Hour Division enforcement very seriously,” she stated. “As secretary of labor, I am committed to ensuring that every worker is paid at least the minimum wage, that those who work overtime are properly compensated, that child labor laws are strictly enforced, and that every worker is provided a safe and healthful environment.”

According to Solis, the WHD has already begun the process of adding 150 investigators to its field offices to refocus the agency on these enforcement responsibilities. In addition, funding from the economic stimulus package will allow the Labor Department to hire 100 investigators to ensure that contractors working on stimulus projects are in compliance with the applicable federal labor laws.

Kutz told committee members that he sent the results of the GAO investigation to the Labor Department and that department officials had stated that disciplinary action against employees guilty of any negligence or dishonest behavior would be forthcoming.

McKeon pressed Kutz for answers on several points and learned that the investigation focused primarily on career employees of the WHD and not political appointees.

Kutz told the committee that the division had been hit with a series of budget and personnel cutbacks from 1997 to 2007. He said that during the 10-year period, the number of wage and hour investigators decreased by approximately 25 percent—while the number of complaints increased steadily each year.

McKeon said it was obvious that the problem stemmed more from a lack of resources and proper training than political direction.

“I believe that we all agree that this is a problem and that we must ensure workers are paid honest wages for an honest day’s work,” he said. “I believe what we need to do is get someone from the Labor Department in here to work with us and get to the bottom of what must be done and find real solutions to this problem.”

The undercover investigation followed a report released by the GAO in July 2008, which found that miscommunication and poor coordination of staff and resources had hampered the WHD’s ability to enforce the law.

Miller stated that he asked the GAO to conduct the investigation and research because ensuring that workers are paid fairly is one of his top priorities. Miller added that congressional oversight of the enforcement of federal wage and hour laws has been sadly lacking.

“This committee will be working to ensure that workers are paid fairly and on time and receive the protections guaranteed by law,” he said.

Bill Leonard is senior writer for SHRM Online.