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Former Wage and Hour Administrator offers a glimpse inside the DOL

Investigators within the Department of Labor’s Wage and Hour Division are, for the most part, “pro-worker, but not anti-employer,” says Paul DeCamp, former Wage and Hour administrator, speaking at a conference session entitled “Inside the DOL Wage and Hour Division” at the 25th annual Upper Midwest Employment Law Institute in St. Paul, MN, on May 30, 2008.

“Every law that the agency enforces is, at its core, about protecting workers’ rights in one way or another,” DeCamp noted. “Agency personnel believe in the laws that they enforce, and they see themselves as protecting the workers whose rights may have been violated.”

“Some investigators have seen so many willful violations during their careers that they have become jaded and generally suspicious of employers,” he concedes, “but that is not the typical field employee.”

DeCamp served as Wage-Hour Administrator from August 31, 2006, to December, 2007. His recess appointment by President George W. Bush drew fire from labor unions and Democratic members of Congress who opposed his nomination because he represented Wal-Mart, always a favored target of labor, as a management attorney. Yet under his tenure, the Wage and Hour Division recovered the highest level of back wages for employees for a fiscal year in the agency’s history. (He now co-chairs the national wage-hour practice group at Jackson Lewis, LLP, a national employment law firm that represents employers, and is a partner in the firm’s Washington, DC region office.)

The agency. The Wage and Hour Division has 220 offices across the US and some 1,300 employees. According to DeCamp, about 84 percent of the agency’s time is spent enforcing the Fair Labor Standards Act (FLSA).

In addition to the FLSA, 15 percent of the Division’s efforts are devoted to enforcing laws related to government contracting, including the Davis-Bacon Act, Service Contract Act, and Walsh-Healey Public Contracts Act. The complexity of enforcing government-contracting related statutes means such cases typically are assigned to more seasoned investigators who have completed advanced training. (The agency’s 740 investigators, incidentally, are classified as non-exempt.)

While the Department of Labor is also called upon to enforce the Family and Medical Leave Act (FMLA), the FMLA accounts for only about 1 percent of the Division’s enforcement time. “We see much higher rates of actual violations when investigating FLSA complaints,” DeCamp explained. More than 50 percent of FMLA complaints result in no violations found, he noted. In contrast, only 20-30 percent of FLSA complaints result in a finding of no violation.

“The FMLA doesn’t lend itself as readily to class or collective treatment,” DeCamp added.

Enforcement efforts. The Wage and Hour Division handles 30,000 compliance actions each year. Of these, 80 percent are complaint-based—generated by employees who have contacted the agency. The remaining 20 percent are investigations instituted by the agency without a complaint, in accordance with its particular goal of protecting workers who are lower-income and less likely to help themselves or to retain private counsel to take on their employer.

“These `directed’ cases focus on types of workplaces or employers where compliance is likely to be low and violations are likely to go unreported or underreported,” DeCamp noted. “For example, the agency seeks to maintain an active directed investigation program in the areas of agricultural labor, child labor, low-wage industries, and businesses that tend to employ undocumented workers.” The DOL’s 2008 enforcement initiatives include:

Gulf Coast. The agency has expended considerable resources to address the anomalous labor conditions that arose after Hurricanes Katrina and Rita in the Gulf Coast in 2005, with the convergence of large-scale government contracting and the day labor/farm labor contractor model of staffing. “The result was a very large number of fly-by-night enterprises with little or no working capital and little or no experience with contracts, particularly federal government contracts, or with complying with the full spectrum of applicable labor laws,” DeCamp explained. As a result, many workers in the Gulf Coast did not receive all of the pay to which they are entitled.

“The severity of the problem was magnified by the fact that a large portion of the emerging workforce in the region consists of undocumented workers who are reluctant to approach the federal government to present a wage claim,” DeCamp added. “The agency is actively enforcing the laws in the region, as well as working with community groups, such as churches, immigrant rights groups, and local media to get the word out to the worker community that the agency is there to protect their rights and not to enforce provisions of the INA that are outside the Department’s bailiwick.”

Power-driven paper products machines. Compactors and balers give rise to the most frequently cited non-agricultural Hazardous Occupations order (HO) violation, as well as some of the most serious workplace injuries to minors. This initiative will focus, in part, on large shopping malls in which multiple retail stores frequently share a common compactor and/or baler, and where employers might not be as aware of their own responsibility to maintain compliance to the extent that their minor workers potentially have access to the compactor or baler.

“Independent contractors.” The focus for 2008 is on low-wage industries such as construction, janitorial, hotel and motel, and day labor, DeCamp notes. “These are industries where, historically, misclassification frequently occurs. Moreover, these industries tend to employ significant numbers of undocumented workers who are particularly unlikely to complain to the government about labor violations.” This directed initiative also will focus on broad assertions of joint employment, “especially in instances where entities that are nominally subcontractors are, in fact, supplying fungible work crews that become integrated with the other workers on a job site under the supervision of a higher-tier contractor or the property owner or manager.”

Disclosures, wages, housing, and transportation. The agricultural initiative focuses this year on disclosures that employers must make to workers, the wages they must provide, terms and conditions relating to employee housing, and the transportation, if any, that the employer provides to its workers. “Transportation, in particular, is an especially important aspect of enforcement because virtually every year the news carries one or more stories about a serious or fatal automobile accident involving a farm labor contractor transporting migrant workers in an uninsured or otherwise unsafe vehicle,” DeCamp explained.

Recidivism. The Wage and Hour Division seeks to track the impact of its interactions with employers by reinvestigating employers that have previously been found in violation. The agency hopes to see that reinvestigated employers have a higher compliance rate than the average for their industry. “If so, this suggests that the agency’s efforts are increasing compliance. Where prior interactions with the agency have not improved compliance, this indicates that the agency needs to be more aggressive and punitive with respect to recidivist employers.”

The overwhelming majority (98-99 percent) of compliance matters are resolved administratively, DeCamp said. Only 1 to 2 percent end up in the solicitor’s office (the litigation arm of the DOL). Between 100-150 suits are filed each year in the Division, most of which are FLSA suits. Most suits are resolved before litigation.

Advice from the inside. And if the DOL comes knocking? First, no excuses. “If there is a violation, the agency’s personnel are not especially interested in why an employer violated the law,” DeCamp advised. “Maybe the violation reflects a uniform industry practice, or the result of competitive pressures, or perhaps the aftermath of a drunken HR analyst who played `pin the tail on the exemption donkey.’ It does not matter. The agency will insist that employers comply with the law, as well as make any adversely affected workers whole.”

Strike the right tone. “It is very important for employers to cooperate with the agency during an investigation,” DeCamp advised. “The initial conference with an investigator is critically important in setting the tone for the rest of the investigation. It is during that initial interaction that the investigator quickly begins to form an overall impression regarding whether the employer is basically acting in good faith and trying to do the right thing (even if there may ultimately be a violation) or, instead, is being obstructionist and uncooperative, which the investigator will probably interpret as indicating a disrespect for the law.

“If the investigator concludes that he or she cannot trust the employer to provide timely and accurate information and to work with the investigator to clear up any issues that the investigator believes need correcting, the matter will quickly become adversarial, and the likelihood of the employer’s achieving a mutually acceptable resolution diminishes substantially,” DeCamp warned. “For example, an investigation originally involving a discrete issue affecting a few employees at one work site could morph into a nationwide investigation into a variety of issues.”

Working with the Department of Labor is the far preferable means of resolving a wage dispute. “Except in the most unusual circumstances, an employer is virtually always better off resolving a matter with the Department of Labor than through litigation with a private attorney,” he stressed. “In most instances, so long as the employer agrees to future compliance and to provide back pay, and where there is no evidence of deceit or intent to violate the law, the Department will be willing to resolve an investigation on the basis of a two-year limitations period, without liquidated damages, without attorneys’ fees, and with the use of the fluctuating workweek method for calculating back overtime.

“Most private counsel, by contrast, seek a three-year limitations period, plus liquidated damages, attorneys’ fees and costs, and using an overtime calculation that seeks full additional time-and-a-half for all hours above forty in a week.

“Moreover, private counsel tend—and perhaps have an ethical obligation—to take the most aggressive legal positions regarding liability,” DeCamp pointed out, “whereas the Department has a more neutral approach to the law.” While a private attorney strives to obtain the optimal outcome for his individual client, “the department needs to look at its cases more from a macro perspective. Each case has to fit in with the agency’s overall enforcement approach.”

This article reflects comments by DeCamp in his oral presentation, responses to CCH questions, and the speaker’s written materials prepared for attendees.

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