Congressional Testimony

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Statement before the Subcommittee on Labor, Health and Human Services, and Education Committee in Appropriations United States House of Representatives

Mr. Chairman, and distinguished Members of the Subcommittee, we appreciate the opportunity to appear before you today to present the Department of Labor's Fiscal Year (FY) 2002 Budget as it relates to the Pension and Welfare Benefits Administration (PWBA), Employment Standards Administration (ESA), Occupational Safety and Health Administration (OSHA), and Mine Safety and Health Administration (MSHA).

At Secretary Chao's confirmation hearing three months ago, she identified six key priorities for the Department that are reflected in our 2002 budget. Three of these priorities are addressed by the agencies represented on this panel. Today, we four can put several of the Secretary's goals in context as they relate to our Worker Protection Agencies.

The Secretary's second goal is to ensure the safety and health of every worker.

As the Secretary has stated, the Department needs to be in the business of assisting workers -- through employers -- before an accident occurs. Make no mistake: enforcement is a crucial part of the Department's job. But inspections and citations alone will not achieve the Department's goal of ensuring safe and healthful workplaces. Compliance assistance is an equally important element of the Department's strategy. OSHA's 2002 budget is $426 million; MSHA's is $246 million, for a combined total of $672 million.

The Secretary's third goal is to guarantee an honest day's pay for an honest day's work.

The Department needs to enforce our nation's labor laws using common sense, not just a reflexive, one-size-fits-all approach. The Department's 2002 request maintains our worker protection agencies at 2001 levels -- and we are expanding our compliance assistance efforts in 2002. Since 1996, the Department realized a 36% increase in worker protection programs -- significantly outpacing inflation. The Employment Standards Administration has an FY 2002 budget request of $284 million.

The Secretary's sixth goal is to make sure workers' pension and welfare benefits are protected.

The Secretary recently met with Attorney General Ashcroft to ensure that the Departments of Justice and Labor will do their utmost to protect our worker's pension funds. PWBA, which guards the integrity of the nation's pension funds, has an FY 2002 budget request of $108 million.

This concludes an overview of the Secretary's specific goals as they tie to our respective missions; agency-specific 2002 plans follow:

PWBA's budget request for 2002 provides for a total of $108 million and 837 FTE. The 2002 request is essentially a continuation of our FY 2001 resource level.

The Pension and Welfare Benefits Administration (PWBA) promotes and protects the pension, health, and other benefits of over 150 million participants and beneficiaries in more than six million private sector employee benefit plans, holding nearly $5 trillion in assets.

Private sector employee benefit plans provide retirement income, health care, and other employee benefits on which the majority of our nation's population has come to rely. The economic security of an individual or family is obviously weakened if pension, health, and other benefits are not paid as promised.

In order to implement Title I of the Employee Retirement Income Security Act (ERISA), the primary Federal statute that protects employee benefits under privately-sponsored pension, health, and other benefit plans, PWBA employs a comprehensive compliance and education strategy. This strategy assists workers in understanding their rights and responsibilities, educates plan officials about their responsibilities and options, and deters and corrects violations of the relevant statutes.

Here, too, compliance assistance aims at intervening before the pension check or health care is lost, rather than solely enforcing the law afterward. The budget request for 2002 expands our compliance assistance activities.

PWBA assists workers by maintaining a nationwide participant assistance program with over 100 staff who provide written and telephone responses to participant inquiries. In FY 2000, our benefits advisors answered 158,000 inquiries and recovered $67 million directly for participants. These inquiries also are an excellent source of referrals for potential compliance actions. In FY 2000, 1,252 investigations were opened as a result of referral.

PWBA also develops and distributes a variety of educational materials. Thirty brochures on a variety of benefit subjects are currently available through our toll-free line. In FY 2000, we distributed approximately 950,000 copies of our publications. The Agency has created Retirement Savings and Health Benefits Education Campaigns through public and private sector partnerships leading to a significant increase in the number of inquiries and fostering a better informed public. Outreach efforts have been undertaken in conjunction with the American Savings Education Council, U.S. Chamber of Commerce, Merrill Lynch, the Small Business Administration (SBA), American Society of Actuaries, American Institute of Certified Public Accountants, and the American Bar Association to name just a few.

Our web site is another source of valuable information for plan officials and participants with links to information designed to assist consumers and plan sponsors. Working with the U.S. Chamber of Commerce, the SBA and Merrill Lynch, PWBA has developed an interactive website designed to help small business employers select the retirement savings vehicle that best meets their needs.

To assist plan officials, we participate in conferences, symposia and programs designed to expand their understanding of ERISA's compliance requirements and have also put into operation a toll-free "help desk" and a web site to provide compliance and technical assistance to all plan sponsors in connection with the approximately one million annual report filings we receive each year under ERISA filing requirements (Form 5500 and the new EFAST filing system).

Despite the emphasis on education and other forms of compliance assistance, situations remain where direct enforcement action is necessary to protect plan assets and the benefits of America's workers, retirees and their families. Our enforcement program is guided by a Strategic Plan which designates certain areas of special emphasis - areas that target populations of plan participants who are potentially exposed to the greatest risk of loss. In FY 2000, 4,216 civil cases were closed -- 53% with corrective action. We also closed 151 criminal cases, obtained 90 indictments, and 52 convictions and guilty pleas. We recovered $564 million for plan participants as a result of investigations.

In developing our FY 2002 request, we protected our base of front line staff by carefully examining FY 2000 and 2001 activities and, as appropriate, shifted resources to fully maintain our current level of enforcement compliance and participant assistance and education and outreach activities.

Within the FY 2002 resource level, we are also requesting $500,000 for our "Orphan" Plan project to cover the costs associated with providing, when necessary, independent fiduciary services to handle termination and distribution issues related to plans that have been abandoned to ensure that participants and beneficiaries receive their pension benefits.

In FY 2002, ESA is requesting $584.4 million and 4,404 full-time equivalents (FTE) to conduct its worker protection and workers' compensation programs. Specifically, ESA is requesting $331.4 million and 3,013 FTE for the Salaries and Expenses account; $80.3 million and 845 FTE to be financed by the proposed Federal Employees' Compensation Act (FECA) surcharge; $36.7 million and 133 FTE in the Fair Share portion of the Special Benefits account; and $136 million and 413 FTE for the new Energy Employees' Occupational Illness Compensation Act program.

ESA is the largest agency in the Department of Labor with well over 4,000 employees located in offices throughout the country. ESA administers several programs that protect the basic rights of workers, including: overseeing minimum wage, child labor, and overtime pay standards; ensuring equal employment opportunities for employees of Federal contractors; administering Federal workers' compensation programs; and protecting workers' rights as union members. As a result, we make every effort to be as accessible to the American worker as possible, whether through one of our many field offices, toll-free telephone hotlines, the Internet, or by some other means.

ESA's mission is vital to the success in achieving the Department's goals of having a Secure Workforce and Quality Workplaces. Our strategic goals are: 1) to create a better workplace by increasing both employer and employee awareness of, commitment to, and involvement in assuring fair wages and equal employment opportunity, minimizing the financial burden of work-related injuries, and safeguarding union democracy; and 2) to secure public confidence through excellence in the management and delivery of ESA's programs and services. ESA's FY 2002 budget request supports these goals.

In FY 2002, ESA is concentrating on two new major initiatives, both of which fall under the purview of the Office of Workers' Compensation Programs (OWCP). These two initiatives are: further developing the new Energy Employees Occupational Illness Compensation Program Act (EEOICPA) program and establishing a surcharge to pay for the administration of the Federal Employees' Compensation Act (FECA) program.

EEOICPA is the newest addition to the compensation programs that OWCP administers. Established in FY 2001, EEOICPA was created to provide compensation to employees or survivors of employees of the Department of Energy (DOE), its contractors and subcontractors, companies that sold beryllium to DOE, and atomic weapons employers who have developed a radiation-related cancer, beryllium-related disease, or chronic silicosis as a result of their work in producing or testing nuclear weapons.

In order to implement this new program, OWCP created a Task Force which has:

• developed draft regulations that will be published by the end of this month;
• drafted an organizational structure currently under review;
• designed claim forms;
• established claims intake centers with support from DOE;
• set up a call center;
• developed training for staff; and
• started information systems, including an automated medical bill payment system, in preparation for accepting claims on July 31, 2001.

Because this is the start-up year, it is anticipated that EEOICPA will grow dramatically in response to projected claims filing. ESA's FY 2002 request includes a funding level for EEOICPA that will enable OWCP to fully serve these claimants. Specifically, the FY 2002 request will support EEOICPA program management, claims processing, and customer support services. This budget request will also provide funding for activities to be conducted by the Department of Health and Human Services.

The second major initiative in ESA's FY 2002 request is to change the manner in which FECA Salaries and Expenses costs are funded. Currently, these administrative costs are financed by the Department of Labor. However, in this budget request OWCP proposes that each Federal agency pay a surcharge for FECA administration in addition to the amount they currently pay for compensation benefits. There is proposed statutory language in this request that amends the FECA to establish a separate Administrative Expenses Account within the Employees' Compensation Fund. Each year, the Secretary of Labor will determine each agency's proportionate share of the administrative costs needed to cover expenses for the subsequent fiscal year. Funds to cover FECA's administrative costs would then be transferred from each Federal agency into this new account based upon this annual determination.

This initiative is intended to more fully highlight the cost of workers' compensation, thus providing an additional incentive for agencies to strengthen their work-site safety programs.

In FY 2002, ESA will continue its commitment to promoting compliance with employment standards and worker protection laws; reducing the incidence of federal contractors out of compliance with their contractual Equal Employment Opportunity obligations; and safeguarding union democracy and financial integrity.

Wage and Hour's overall compliance program balances public education and outreach with enforcement efforts using a variety of enforcement techniques. The program targets low-wage industries to increase compliance, with particular emphasis on child labor, and remedy of violations. In low-wage industries violations are more often egregious and complaints less common. Many of these industries, such as agriculture, garment, health care, guard and janitorial services, restaurants, hotels/motels and day-haul continue to offer a source of employment for vulnerable workers including many immigrants -- both legal and undocumented -- who are commonly exploited but unlikely to complain.

A cornerstone of the Office of Federal Contract Compliance Programs' (OFCCP) strategy to ensure compliance, while at the same time reducing the reporting burden on Federal contractors, is the implementation of the tiered compliance evaluation, in accordance with 60-1 regulations. This strategy of tiered compliance evaluation streamlines the rules and requirements, promotes voluntary compliance by encouraging contractor self-audits, and focuses limited agency resources toward contractors who are not in compliance with the law. OFCCP also implements strategies that focus on contractor technical assistance, outreach and education. This, too, promotes voluntary compliance by encouraging self-audits.

The Office of Labor-Management Standards will implement the Labor-Management Reporting and Disclosure Act (LMRDA) electronic filing and Internet public disclosure system by the end of calendar year 2001. This system will make the information from the LMRDA union reports available to the public through the Internet and will also allow unions the option of electronically submitting their LMRDA reports.

For OSHA in FY 2002, the President is requesting $426 million -- a slight increase over 2001 -- and 2,292 full-time equivalents (FTE). Secretary Chao has made it very clear that workplace safety and health is one of her top priorities. The Department's priorities for OSHA are: to target the most serious hazards and the most dangerous workplaces; and to emphasize prevention through compliance assistance.

Last month marked the thirtieth anniversary of OSHA's inception and we are very pleased with the progress made in reducing workplace injuries and illnesses in this country. The Bureau of Labor Statistics (BLS) reports that the overall injury/illness rate now stands at 6.3 per 100 workers. This represents a drop of 43 percent since the first BLS survey in 1973, the ninth decrease in the past ten years. Although that is good news, there are also indications of work to be done. In 1999, BLS reported that there were 5.7 million injuries and illnesses in American workplaces and more than 6,000 workers were killed on-the-job.

Enforcement is essential, but our initial efforts should be on prevention through compliance assistance -- which would include a range of activities such as outreach, education, training, technical assistance, voluntary protection programs, and partnerships with the private sector.

In recent years, compliance assistance has received an increased share of the agency's budget. There are now compliance assistance positions in virtually every OSHA office around the nation. These specialists provide information about the agency, inform employers of "best practices" in workplace safety and health, and direct the public to other sources of assistance. OSHA also enters into partnerships with the private sector. There are now 97 partnerships with the private sector or public agencies -- an increase of about 90% from three years ago. For example, last year OSHA signed an agreement with the Associated Building Contractors (ABC). This agreement is an industry model for OSHA and construction companies with exemplary safety records. Under its terms, ABC has created a "platinum" level safety designation for contractors who meet the most stringent safety requirements. "Platinum" contractors receive inspections only in response to signed complaints from employees, reports of imminent danger, or fatalities and major accidents. Contractors around the country who have enlisted in this effort include two dozen employers in the Cleveland Area who are members of the Construction Employers Association. To encourage even more agreements with the private sector, OSHA launched a page on its website that highlights successful partnerships and provides a step-by-step guide on how to initiate a partnership.

The on-site consultation program continues to provide free assistance to small business employers in identifying and removing hazards from their workplaces. In FY 2001, 31,200 consultation visits are planned, with priority given to small business employers in high-hazard industries. Consultants visit the worksite, conduct inspections and make suggestions to employers without issuing citations or penalties. Sanctions are levied only if employers fail to correct serious violations. Since OSHA's inception nearly 400,000 employers have received this service.

The Voluntary Protection Program (VPP), which recognizes employers who maintain exemplary safe and healthful workplaces, is another compliance assistance program that continued to grow last year. VPP workplaces go beyond OSHA's requirements in protecting their employees and, therefore, do not receive routine OSHA inspections. Working with the Voluntary Protection Program Plan Association, OSHA has encouraged VPP participants to serve as mentors to employers who need assistance in improving their working conditions. Last year, OSHA expanded the VPP, allowing resident contractors at VPP sites to participate.

The agency also uses technology to enable employers and employees to eliminate on-the job dangers. For instance, OSHA's website provides timely and complete information about the agency's standards, compliance assistance tools and other activities. In March, the website received almost 30 million "hits." Each month, more than 50,000 users download electronic "Hazard Awareness Advisors." These Advisors help employers and employees identify and understand the hazards specific to their workplaces and their industries. The software interviews the user about his or her workplace activity and equipment, follows up with intelligent questions for the user, identifies applicable OSHA standards, and even lists the nearest state office to apply for a consultation visit. The Hazard Awareness Advisor software program has been recognized for its unique approach to assisting the public. In August 2000, the software was named a finalist for the Innovations in American Government Award, which is sponsored by the Ford Foundation and Harvard's John F. Kennedy School of Government.

While OSHA has enhanced compliance assistance it has not short-changed enforcement. During the first six months of FY 2001 the agency has approximately 90 significant cases -- those resulting in proposed penalties of $100,000 or more. The agency will continue to focus on the worst hazards and those workplaces with high injury and illness rates.

Earlier this year OSHA ensured protection for almost 500,000 additional workers when it approved New Jersey's public employee safety and health program. New Jersey has adopted standards that are identical to most OSHA rules and has committed to adopting all future OSHA standards. For the first time public employees in New Jersey will be fully protected while working in such dangerous occupations as firefighting, sanitation, and municipal waste disposal.

In FY 2002, MSHA is proposing a budget of $246.3 million and 2,310 FTE, a net decrease of 47 FTE. MSHA's request supports the Department of Labor's strategic goal of fostering quality workplaces that are safe, healthy, and fair. The request is critical to our mission of protecting miners' safety and health and will enable the Agency to focus on activities designed to achieve our performance goals to reduce work-related deaths, injuries, and illnesses in the mining industry.

MSHA's program to improve miners' safety and health integrates all of the tools found in the Federal Mine Safety and Health Act of 1977. Our statute includes annual inspections, education and training and technical support functions. The preventive effects of MSHA's inspection activities are enhanced by our compliance assistance activities. For example, Agency personnel are currently engaged in a multi-state effort to raise miners' and mine operators' awareness of safety hazards. As part of this effort, MSHA will visit more than 1,600 mining operations and share information on the causes of accidents and how best to avoid them. In addition, Agency personnel will make presentations at public seminars, safety conferences, and industry and labor meetings around the country. As Secretary Chao stated in her testimony, with this emphasis on prevention, we believe that we can save lives, and help the mining community avoid occupationally-related injuries and illnesses.

MSHA kicked off its "Stay Out-Stay Alive" national public awareness campaign on April 16. In cooperation with more than 50 federal and state agencies, private organizations, businesses, and individuals, sponsors programs and events to warn children and adults of the dangers of playing and exploring on active and abandoned mine sites. Every year, dozens of people are injured or killed in recreational accidents on mine property, because the hazards of mines are not readily apparent. MSHA pioneered "Stay Out-Stay Alive" three years ago to educate the public about the hazards.

MSHA's compliance assistance activities also extend to its rulemaking efforts. In 1999, as directed by this Committee, the Agency published new training requirements, Part 46, that impact about 10,000 surface nonmetal mines. The effective date of the Part 46 standard was October 2, 2000, 1-year after its publication. MSHA specifically included a 1-year implementation schedule to allow sufficient time for the affected mines to understand and comply with the requirements of the rule. In addition to continuing a concentrated outreach program, MSHA is conducting a special compliance assistance Part 46 visit in conjunction with the first regular inspection at the mines impacted by the part 46 regulation. These compliance assistance activities will help to ensure that mine operators and miners fully understand the training requirements, and will help us achieve the intent of the rule: trained miners.

MSHA is taking a similar approach with its regulation concerning miners' exposure to diesel particulate matter in underground coal mines. These rules have staggered effective dates, the first of which was May 21, to ensure compliance feasibility. In addition, the Agency recently completed five seminars to provide the coal mining industry information about the new rules. About 300 individuals attended the seminars, which provided the attendees an opportunity to question Agency staff about the provisions of the rule, and the Agency's implementation approach. Providing these forums before the effective date of the rule, allows mine operators and miners to understand and comply with the rule from the outset.

The metal and nonmetal mining sector continues to experience growth in the number of active mining operations. As a result, MSHA is proposing a transfer of $3.7 million and 40 FTE from the coal mine safety and health program to the metal and nonmetal safety and health program. These resources will be used to address basic compliance efforts, focus on accident prevention, and enhance compliance assistance activities, particularly at small mining operations and those experiencing safety and health compliance problems.

The Department appreciates the opportunity to submit this testimony.