Stricter Wage and Hour Enforcement Draws Congressional Scrutiny

By Bill Leonard Nov 9, 2011
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A recent effort by the U.S. Department of Labor (DOL) to intensify enforcement of federal wage and hour law has drawn the attention of Republican leaders in the House of Representatives. The House Subcommittee on Workforce Protections held a hearing on Nov. 3, 2011, to examine the enforcement initiatives of the DOL’s Wage and Hour Division (WHD) and to determine if recent changes are creating undue burdens for employers.

The subcommittee’s GOP leaders criticized the Obama administration’s approach to enforcing wage and hour regulations under the Fair Labor Standards Act (FLSA), saying it was overly aggressive and created a contentious atmosphere with business owners.

“Not only has the Obama administration proposed budget cuts to important resources that assist and educate employers, it has also taken an adversarial approach to enforcement of the law,” said Rep. Tim Walberg, R-Mich., chair of the subcommittee. “The Wage and Hour Division is growing with more staff dedicated to punitive enforcement activities and drafting burdensome regulations, which means employers will have fewer resources to help follow the law and face a growing bureaucracy ready to catch them when they don’t.”

Nancy J. Leppink, deputy administrator for the Wage and Hour Division, testified about the agency’s enforcement efforts since President Barack Obama took office in January 2009. She told the subcommittee members that the WHD hired 300 new investigators in 2009 and 2010 and that the increased staff helped the agency collect nearly $225 million in back wages during fiscal year 2011—a record amount.

“These results are just one demonstration of the capability and commitment of the WHD’s staff, who strive every day to ensure that our nation’s workers have the protections provided to them under the FLSA,” Leppink testified.

Rep. John Kline, R-Minn., chairman of the House Education and the Workforce Committee, questioned the efficacy of hiring 300 investigators and then cracking down on employers that are struggling to survive in a tough economic climate. He asked Leppink if the WHD examined the economic impact that investigations have on employers and if agency officials considered the fact that paying penalties and back wages could run some employers out of business.

Leppink answered that it was the WHD’s duty to ensure that workers “are paid and receive fair wages for the work they perform.” She told the subcommittee that pursuing this mission “places more money into the pockets of consumers and in turn stimulates the economy.”

“But if you force a business to close because they have to pay out harsh penalties, then those same employees lose their jobs and livelihood,” Kline retorted. “What’s the economic impact there?”

Proper Perspective?

Several Democratic members of the subcommittee said that the focus of the GOP members’ questions was skewed and needed a broader perspective.

“The goal here is to ensure [that] employers that abide by the law and pay their workers fairly aren’t undercut by unscrupulous business owners. As I see it, this is an issue of having a fair and level playing field for all,” said Rep. Timothy Bishop, D-N.Y. “I can’t tell you how many times I have heard from building contractors in my district who complain that they just cannot compete on price with other builders that don’t pay their workers even the minimum wage.”

While the Republican members agreed on the need to ensure a level playing field for businesses, they expressed concern that the WHD’s methods for enforcing the law had become onerous and confusing for most employers.

Tammy McCutchen, a WHD administrator when George W. Bush was president, testified that she was troubled by the agency’s announcement in 2010 that it will no longer publish opinion letters on wage and hour issues.

“The Wage and Hour Division has closed its doors to employers seeking guidance regarding what the FLSA requires,” McCutchen testified. “In other words, the agency has stopped efforts to inform employers how to comply with the law, preferring only to impose draconian punishments when an employer guesses wrong about what the law requires.”

David Fortney, a former deputy solicitor for the DOL, agreed with McCutchen and said that the department “is not striving to effectively implement the FLSA in today’s workplaces. Indeed, just the opposite result is being achieved. The Wage and Hour Division has charted an FLSA enforcement course that fails to provide for the most positive outcome for employers and employees.”

The Democrats disagreed with the GOP efforts to put the WHD enforcement efforts in a bad light. Rep. Lynn Woolsey, D-Calif., the ranking member of the subcommittee, said the hearing did nothing to help unemployed workers find the jobs that they desperately need.

“In order for the law to work it has to be enforced. I applaud the Department of Labor for stepping up its enforcement of the FLSA and reject the notion that doing so somehow hurts employers,” Woolsey said. “Since many of the workers covered by the FLSA are vulnerable to economic upheaval and may depend on unemployment compensation, it is especially important to enforce the law during these difficult economic times.”

Walberg and other Republicans asserted that they were not attempting to weaken enforcement of the FLSA and stated that the subcommittee had the responsibility to provide oversight of the WHD’s activities.

“Our job here is to ensure that the Wage and Hour Division is enforcing the law in a way that is fair and equitable and cost-efficient,” said Walberg. “So, we will continue this discussion and plan to have further hearings on this issue.”

Bill Leonard is a senior writer for SHRM.

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