On March 25, 2009, the Government Accounting Office (“GAO”), the investigative arm of Congress, released a report summarizing its audit and investigation of the complaint intake and investigative processes of the Department of Labor (“DOL”) Wage and Hour Division (“WHD”). The GAO heavily criticized WHD’s practices in these areas, outlining numerous shortcomings reportedly due to lack of resources.

A call to increase DOL enforcement immediately followed. Secretary of Labor Hilda Solis responded to the GAO report by announcing that the DOL is adding 250 new investigators to “refocus the agency on [wage and hour] enforcements responsibilities.” The U.S. House Education and Labor Committee held a committee hearing on “GAO’s Undercover Investigation: Wage Theft of America’s Vulnerable Workers.” In his opening remarks, chairman of the committee, U.S. Rep. George Miller, echoed Secretary Solis’ focus on more enforcement, stating that improving the WHD would require “a renewed commitment to enforce the law.”

The call-to-arms by Administration officials and Congress means increased risk to employers that the DOL will come knocking at their door. Employers are likely to be effected in the following ways by to the DOL’s renewed focus on enforcement.

More Invasive Investigations into Wage and Hour Complaints.

Employers are likely to face more invasive DOL investigations than in the past. The GAO report revealed that some WHD investigations were conducted only over the phone or not at all. Those investigations that were conducted were often terminated prematurely by WHD investigators who failed to follow through, reportedly due to lack of resources.

The DOL now seeks to remedy these highly criticized practices by adding 250 more WHD investigators. As a result, employers are likely to see a greater number of in-person and more thorough DOL investigations. As the report highlighted, DOL investigations are especially worrisome to employers because they open the door for the DOL to audit all of the employers’ wage and hour practices, not just those addressed in the complaint and potentially identify other affected employees. Even where no violations exist, this investigation process expends considerable employer resources, both in employee time and disrupted operations.

Enlarged Efforts to Compel Payment of Claims.

The WHD is now more likely to expend efforts to compel payment of claims. The GAO report found that in many cases, if the employer did not immediately agree to pay a claim, the WHD did not seek to compel payment. This criticism is likely intended to target employers, such as those used in the GAO’s examples, who admitted to violations but refused to pay. Nonetheless, it is unlikely that the WHD will develop such a nuanced policy on this issue. Instead, we can expect to see a policy that will affect even innocent employers who refuse to pay because no violation occurred.

Expanded Scope of Complaints Investigated.

Even minor complaints may now trigger a full-blown investigation. The GAO report uncovered that the WHD failed to investigate every complaint and preferred to investigate only complaints affecting large numbers of employees or resulting in large dollar amounts. These practices were highly criticized in the report and are likely to be the subject of considerable reform efforts. As a result, employers may see a greater number of DOL investigations resulting from even minor complaints. This will be particularly troubling for employers who may now face a large scale investigation, even from a baseless complaint by a single dissatisfied employee.

Increased Complaints and Litigation.

The DOL’s increased focus on enforcement will likely lead to increased complaints and litigation. The GAO report found that WHD sometimes actually deterred employees from filing a complaint by encouraging them to resolve the issue themselves, directing most calls to voicemail, not returning phone calls, accepting only written complaints at some offices, and providing conflicting or misleading information about how to file a complaint. GAO speculated that many of the employees who were discouraged from filing complaints never brought a private lawsuit. The WHD also failed to refer cases to Labor’s Office of the Solicitor, when appropriate.

Under the DOL’s new leadership and with the backing of Congress, the WHD is likely to revise its policy to encourage, rather than discourage, employee complaints. The WHD is also more likely to identify and refer cases to the Solicitor to pursue in the courts. These developments could prove quite costly for employers, who may be forced to defend a rising number of wage and hour complaints and lawsuits.

Employers’ Response to the DOL’s Enforcement Efforts

In response to the DOL’s enforcement efforts, employers should:

  1. Remind their human resources professionals to take complaints seriously and thoroughly respond to the complaints (consider consulting an attorney), and
  2. Conduct self-auditing wage and hour practices to ensure compliance with the law and regulations.