Changes Needed To Deter Violations of Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) sets standards for recordkeeping, minimum wage, overtime pay, and other protections for workers in establishments engaged in interstate and foreign commerce. Noncompliance with the act can severely harm low-wage workers.

While the act does protect employee wages when employers voluntarily comply, there are insufficient deterrents to discourage employers from violating the act. Administrative and statutory limitations can prevent the Department of Labor from fully recovering wages illegally withheld. GAO found extensive recordkeeping violations. However, there are no civil penalties for recordkeeping violations and, while criminal penalties exist, they are not used. There are also no civil money penalties for violating minimum wage and overtime violations. Although criminal and liquidated damage penalties exist for willful violations, they have not been used extensively. Many employers appear to have willfully violated the act. Labor officials rarely seek criminal sanctions because the Department of Justice is hesitant to prosecute them, and filing criminal suits reduces Labor's ability to recover employee back wages. Regional solicitors have seldom sought liquidated damage penalties against willful violators. As a result, habitual or flagrant violators receive no harsher treatment than do employers who inadvertently violate the act. The statute of limitations restricts an employer's obligation to repay employees back wages in such a manner that back wages are lost. Several administrative practices followed by Labor also limit the back wages that employees eventually recover.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Franklin A. Curtis Team: General Accounting Office: Human Resources Division Phone: (202) 275-5451