Almost $19 Million in Back Pay Never Reached Workers

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By Gayle Cinquegrani

April 25 — The Labor Department goes to great lengths to enforce laws and litigate cases, but sometimes the back wages it recovers wind up enriching the country's coffers instead of the workers' wallets.

On average, 5 percent to 10 percent of back wages due workers never reaches them, Michael Kravitz, the communications director for DOL’s Wage and Hour Division, told Bloomberg BNA April 15. In fiscal year 2014, the DOL sent $18.9 million in undisbursed back wages to the U.S. Treasury because it couldn't find the intended recipients.

Getting money into the hands of workers can be challenging, Kravitz said, because the “vulnerable workers” the DOL concentrates on helping are often “transient.” They may be seasonal workers who move frequently or undocumented workers who are trying to avoid government attention.

Normally, an employer pays the back wages directly to the workers and submits proof of payment, usually canceled checks, to the Labor Department. If an employer can’t find a worker, however, the employer sends the paycheck to the DOL. If the agency can't find the worker within three years, under Section 216(c) of the Fair Labor Standards Act, it sends the money to the U.S. Treasury, Kravitz said.

The amount of undisbursed back wages that will go into the national treasury for FY 2015 is not yet available, the DOL told Bloomberg BNA, but Kravitz said the 5 percent to 10 percent figure is “very much a constant number.”

More Than $200 Million Recovered

In FY 2015, the WHD recovered back wages of $246.8 million for 240,340 workers, according to the agency's website. In FY 2014, it recovered $240.8 million for 270,570 workers. Statistics for WHD back wage recoveries are available at http://www.dol.gov/whd/statistics/statstables.htm#flsa.

To help connect workers with the money that’s been collected, the WHD launched the Workers Owed Wages system in January 2015. The system, nicknamed WOW, is a user-friendly Web page on which workers or their advocates can type the names of an employer and a worker to find out if the DOL is holding any back pay for the worker.

The WOW system is available in both English and Spanish. Kravitz said that at last count, more than 300 workers have received more than $1.1 million through the WOW system.

The Labor Department has made publicizing WOW to public interest groups and the media “a regular part of our outreach,” he said. One or two back wage follow-up specialists work in each of DOL’s five regional offices.

They generally don’t search for unlocatable workers individually; instead, they use public outreach and advocacy groups to try to find them. Community outreach resource planning specialists, located in most of DOL’s 55 district offices, also try to get the word out about unclaimed back wage payments.

DOL staffers take brochures about WOW to community events and post notices in local newspapers, including Spanish-language newspapers, and coupon booklets.

Although the DOL doesn’t maintain statistics about the race, ethnicity or birth country of workers who are owed money, it appears that many of the unlocatable workers are foreign. Therefore, the agency has gotten foreign consulates involved. Sometimes, Kravitz said, “we give them specific names and let them help us locate them.”

“The current Labor Department has recognized that stepped-up efforts should be undertaken,” said David Fortney, who was the acting labor solicitor for President George H.W. Bush. “I would give them credit for trying to raise awareness.”

Furthermore, the DOL has entered into “about 150” agreements with consulates from several foreign nations located throughout the U.S. The practice began around 2004, Kravitz estimated, but has accelerated in recent years.

“Over time we realized how efficient the consulates could be in getting money into the hands of workers,” Kravitz said. When the consular agreements expire, usually after two or three years, “they typically are renewed,” he said.

Money Ends Up With U.S. Treasury

“The current Labor Department has recognized that stepped-up efforts should be undertaken” to avoid having back wage recoveries “escheat to the U.S. treasury general fund,” David Fortney told Bloomberg BNA April 19. “I would give them credit for trying to raise awareness,” said Fortney, a partner at Fortney & Scott in Washington who was the acting labor solicitor during the administration of President George H.W. Bush.

“Social media is a good mechanism” for spreading the word that workers can check to see if they have wages waiting for them, he said. For many low-wage workers who move frequently, “there's just no way of finding them” directly.

Fortney pointed out the WOW system provides more privacy to employers than some other DOL databases. The DOL could've set it up to allow a user to scroll through the list of employers whose back wage payments haven't been claimed fully. Instead, the system is set up so a user must type in an employer's name to see if it is on the list.

At least one lawyer who works with many low-wage workers thinks there's “a huge amount” of money in back wages that goes undistributed to the workers who earned it.

Greg Schell, the managing attorney at the Migrant Farmworker Justice Project in Palm Beach Gardens, Fla., told Bloomberg BNA April 20 that DOL statistics likely underrepresent the actual amount because some employers probably vouch to the DOL that they've paid the back wages when in fact they haven't.

Even employers who intend to pay the back wages may not know how to find the workers to whom they are owed. “With the farm workers, I think a very small percentage of the money actually finds its way to the workers,” Schell said.

Finding Farm Workers

Farm workers are particularly likely to change addresses as they move from farm to farm during harvest season. However, Schell estimated 75 percent of the farm workers he's known have had some sort of permanent address, perhaps belonging to a relative, at which they can be contacted.

Employers “are required by multiple laws to keep these addresses, and they just don’t,” Schell said. “Most of the addresses from the employers look like this: Juan Garcia, Mexico,” without any further information, he said.

The Labor Department “can and should fine [employers] and bring legal action against them if they don’t comply” with legal obligations to obtain workers' addresses, according to Greg Schell from the Migrant Farmworker Justice Project.

“We’ve argued for decades” that the DOL should treat more seriously employers' failure to acquire addresses from workers, he said, but the department “just never made this a priority.” To encourage compliance, the DOL “can and should fine them and bring legal action against them if they don’t comply,” he said. When employers settle cases with the department by signing agreements promising future compliance, “this should be at the top of the list,” Schell said.

With regard to workers from Mexico, an employer's failure to obtain a worker's address is particularly ironic, according to Schell. “The typical Mexican has a better ID than the typical American,” he said, because Mexico gives every person a voter identification card that carries the person's photograph and address. “It’s a perfect document” that employers could simply copy, he said.

Through his work at Migrant Farmworker Justice Project, which provides free legal assistance to migrant farm workers and low-wage nonagricultural guest workers in Florida, Schell frequently comes into contact with a worker who may be owed back wages. When he tries to notify the DOL, Schell said, it “doesn’t answer the phone. DOL doesn’t respond to letters.”

Advocacy Groups Could Help

“We try to help DOL find the people,” Schell said. “Particularly with farm workers, we have better contacts.” The DOL could make it easier by providing a list identifying the workers it can't locate, he said. “You would think we would want to share this information.”

Schell's wife works for Justicia Cruzando Fronteras, a nonprofit organization serving lawyers who represent Mexican nationals involved in litigation in the U.S. Last summer, Schell and his wife visited remote mountainous villages in Mexico to try to locate workers who are owed back wages. “We found a ton of people,” he said.

The “DOL has done better in recent years of reaching out to community groups” for short-term help, Schell said, but the agency doesn’t maintain or nurture connections with the groups on an ongoing basis. “I think that DOL has underutilized both in the U.S. and abroad the network of advocacy groups” that could be very useful.

Back wage payments help not only the workers who receive them but also other workers in their community who realize that the DOL can help. “If nobody ever gets the money, we lose the salutary effect of workers telling other workers,” Schell said.

To contact the reporter on this story: Gayle Cinquegrani in Washington at gcinquegrani@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com