Disturbing News From the Department of Labor

Just when you think the economy is the only bad news out there, a new report from the Government Accountability Office offers some unsettling insight into one of our most important government agencies. The New York Times recently published a story about problems in the Labor Department's Wage and Hour Division. This week, Brian Ross, an investigative reporter with ABC News, reported on the same GAO report on Good Morning America.

Whether you are an employee or an employer this report should concern you. I know everyone will agree that our employees should be treated with respect and paid an honest wage for an honest day's work. At The Coles Firm we say "employees are the backbone of any successful organization." While most employers would agree, still there remain those employers whose actions dictate the need for the Wage and Hour Division. When that agency fails employees, everyone suffers.

Besides the obvious moral and ethical concerns involved with protecting all our country's workers, why does this new report matter to employers? There could be far-reaching implications for businesses everywhere. With mismanagement and inaction within the Wage and Hour Division, more and more workers might immediately turn to private litigation against employers for minimum wage and overtime payment violations.

Small claims, mistaken claims, or even frivolous claims that should otherwise be resolved by the Wage and Hour Division at a minimal cost to an employer might instantly become costly litigation. Employers could find themselves spending thousands of dollars defending these lawsuits. To make matters worse, on those occasions where an employer is in violation of wage and hour laws, the Department of Labor's penalties might only consist of back pay to employees while private litigation could result in back pay, liquidated damages (double the back pay award), attorney's fees, and costs of court.

This lax enforcement by the Wage and Hour Division also could result in increased sentiment to strengthen penalties against violating employers. As the New York Times article pointed out, George Miller (a Democratic Congressman from California and the Chairman of the House Education and Labor Committee) said "he would push to enact tougher penalties for wage violations and laws that made it easier for workers to join class-action lawsuits." Wage and hour collective actions already have become one of the fastest growing areas of employment litigation. Suddenly, wage and hour matters could become even more costly. Scary thoughts indeed!

Newly-installed Department of Labor Secretary Hilda Solis has proposed to add 250 more investigators to the Wage and Hour Division in an effort to solve some of the agency's problems. Although we applaud these efforts, we feel more needs to be done with the current Wage and Hour Division workforce. These workers need more training, more oversight, and more motivation. As I said earlier, employees are the backbone of any successful organization.