	Undercover Tests Reveal Inadequate Investigations and Poor Complaint Intake Process

The results of our undercover tests illustrate flaws in WHD’s responses to  wage theft complaints, including delays in investigating complaints,  complaints not recorded in the WHD database, failure to use all available  enforcement tools because of a lack of resources, failure to follow up on  employers who agreed to pay, and a poor complaint intake process. With respect to  complaints, WHD policy states that those involving hazardous conditions  and child labor are its top priority, but a review of WHD records at the end  of our work showed that the case was not investigated or entered into  WHD’s database. Case Studies Show That WHD Inadequately Investigated Complaints

Similar to our 10 fictitious scenarios, we identified 20 cases affecting at  least 1,160 workers whose employers were inadequately investigated by  WHD. One of the complainants also confirmed to the  WHD investigator that the employer was distributing this document. WHD’s Complaint Intake Process, Conciliations, and Other Investigative Tools Do Not Provide Assurance of a Timely and Thorough Response to Wage Theft Complaints

WHD’s complaint intake processes, conciliations, and other investigative  tools are ineffective and often prevent WHD from responding to wage theft  complaints in a timely and thorough manner, leaving thousands of low  wage workers vulnerable to wage theft. In addition, WHD’s  poor record-keeping makes WHD appear better at resolving conciliations  than it actually is. Once complaints were recorded in WHD’s database and assigned as a case  to an investigator, they were often adequately investigated. For example, WHD’s southeast region,  which handled 57 percent of conciliations recorded by WHD in fiscal year  2007, has a policy of not recording investigative work performed on  unsuccessful conciliations in the database. According to WHD  officials, non-conciliations should be initiated within 6 months of the date  the complaint is filed. Our case studies discussed above and in appendix II also include examples  of complaints not investigated for over a year, cases closed based on  unverified information provided by the employer, businesses with repeat  violations that were not fully investigated, and cases dropped because the  employer did not return telephone calls. Appendix I: Scope and Methodology

To review the effectiveness of WHD’s complaint intake and conciliation  processes, GAO investigators attempted to file 11 complaints about 10  fictitious businesses to WHD district offices in Baltimore, Maryland;  Birmingham, Alabama; Dallas, Texas; Miami, Florida; San Jose, California;  and West Covina, California. GAO  investigators obtained undercover addresses and phone numbers to pose  as both complainants and employers in these scenarios. To identify case studies of inadequate WHD responses to complaints, we  data-mined WHISARD to identify closed cases in which a significant delay  occurred in responding to a complaint (cases taking more than 6 months  to initiate or 1 year to complete), an employer could not be located, or the  case was dropped when an employer refused to pay. Appendix II: Additional Case Studies of Inadequate WHD Investigations

Table 5 provides a summary of ten additional case studies of inadequate  Wage and Hour Division (WHD) investigations.
Why GAO Did This Study

The mission of the Department of Labor's Wage and Hour Division (WHD) includes enforcing provisions of the Fair Labor Standards Act, which is designed to ensure that millions of workers are paid the federal minimum wage and overtime. Conducting investigations based on worker complaints is WHD's priority. According to WHD, investigations range from comprehensive investigations to conciliations, which consist primarily of phone calls to a complainant's employer. In July 2008, GAO testified on 15 case studies where WHD failed to investigate complaints. This testimony highlights the findings of a follow-up investigation performed at the Committee's request. Specifically, GAO was asked to (1) test WHD's complaint intake process in an undercover capacity, (2) provide additional case study examples of inadequate WHD responses to complaints, and (3) assess the effectiveness of WHD's complaint intake process, conciliations, and other investigative tools. To test WHD's complaint intake process, GAO posed as complainants and employers in 10 different scenarios. To provide case study examples and assess effectiveness of investigations, GAO used data mining and statistical sampling of closed case data for fiscal year 2007. GAO plans to issue a follow-up report with recommendations concerning resource needs and the recording of complaints. GAO also confirmed key findings with WHD officials.

What GAO Found

GAO found that WHD frequently responded inadequately to complaints, leaving low wage workers vulnerable to wage theft. Posing as fictitious complainants, GAO filed 10 common complaints with WHD district offices across the country. The undercover tests revealed sluggish response times, a poor complaint intake process, and failed conciliation attempts, among other problems. In one case, a WHD investigator lied about investigative work performed and did not investigate GAO's fictitious complaint. At the end of the undercover tests, GAO was still waiting for WHD to begin investigating three cases--a delay of nearly 5, 4, and 2 months, respectively. Similar to the 10 fictitious scenarios, GAO identified 20 cases affecting at least 1,160 real employees whose employers were inadequately investigated. For example, GAO found cases where it took over a year for WHD to respond to a complaint, cases closed based on unverified information provided by the employer, and cases dropped when the employer did not return phone calls. GAO's overall assessment of the WHD complaint intake, conciliation, and investigation processes found an ineffective system that discourages wage theft complaints. With respect to conciliations, GAO found that WHD does not fully investigate these types of complaints or compel employers to pay. In addition, a WHD policy instructed many offices not to record unsuccessful conciliations in its database, making WHD appear better at resolving conciliations than it actually is. WHD's investigations were frequently delayed by months or years, but once complaints were recorded in WHD's database and assigned as a case to an investigator, they were often adequately investigated.