The New Sheriff in Town

The Government Accountability Office (GAO) recently concluded a nine month investigation into the complaint processes of the Wage and Hour Division of the Labor Department. The investigation, sponsored by the House Education and Labor Committee, conducted fictitious undercover calls to Wage and Hour Division employees. The study concluded that complaints were inadequately handled in various ways, including failure to follow-up on employee complaints, failure to be persistent with unresponsive employers, closing cases after employers stated inability to pay back wages, and advising callers to seek legal assistance.

Of the 10 fictitious complaints posed to the Labor Department, two cases concluded with Division employees falsely recording the successful payment of back wages in the Division database.  Five cases were completely left out of the database, one of which was a child labor complaint involving heavy machinery work at a meat packing plant. The remaining three cases failed to be investigated.

The investigation also included an examination of various real complaints handled by the Division in the last nine months. One such complaint, issued by a group of restaurant workers, involved $230,000 in off-clock labor and misappropriated tips. After taking 22 months to initiate an investigation into the complaint, the Division closed the case once the restaurant agreed to pay back wages, not including tips.

What does this mean to the social responsibility professional? An immediate response might be one of indignation: without scrupulous enforceability from the powers that be, why utilize resources to ensure that high levels of labor standards exist within your supply chain? Government enforceability of labor standards always acted, along with brand protection, consumer confidence and pure ethics, as an impetus for proactively assessing supply chain labor standards. Thus, if enforceability is apparently falling short, what should be done?

If you find yourself treading down this thought path, stay calm.  Remember, the GAO investigation focused on the last nine months of Wage and Hour Division complaints. Rather than highlighting the lack of performance of the current Labor Department, the investigation is a “shame on you” to the previous department. In other words, the investigation will set precedence for the “new sheriff in town”, Secretary of Labor Hilda L. Solis, who was confirmed by the Senate just a few weeks ago. Solis already plans on increasing the Labor Department workforce by 30%, hiring 150 more wage and child labor law investigators, as well as 100 additional wage and hour investigators to focus solely on stimulus project contractors.

Thus, government enforceability of labor standards will not only remain an impetus for proactive supply chain labor standard assessments, but will play an even more important role in the next few years.

 

Furthermore, the GAO investigation highlights the value of checks and balances. One mechanism alone should not be assumed to be sufficient. It is essential to “check the checker” to ensure effective enforcement, and to identify weaknesses as opportunities for improvement. Although the Wage and Hour Division fell short in its mission, the GAO investigation acted as a balance by checking the checker. Using the shortcomings identified by the investigation, the new Department under Solis can implement any changes needed to improve processes. 

This case shows that a system of checks and balances is essential to any monitoring effort, whether internal, external, governmental or non-governmental. Companies that rely solely on one monitoring mechanism should implement a check the checker system, or diversify their program to include additional components to act as a balance. When it comes to storing eggs, we all know the dangers of only one basket.

 

Rishi Arora

Research Associate