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Photo: Department of Agriculture Migrant workers load
watermelons fresh from fields near Raymondville, Texas. DOL is responsible for
administering and enforcing the Migrant and Seasonal Agricultural Worker
Protection Act that establishes minimum standards for wages and working
conditions for migrant and seasonal agricultural workers. |
Overview
The Department of Labor administers and enforces more than 180 Federal
laws. These mandates and their governing regulations cover over 10 million
employers and 130 million workers in various workplace activities. DOL enters
the 21st Century having recently celebrated both the 64th anniversary of the
Fair Labor Standards Act, which established minimum wage, overtime standards
and child labor restrictions, and the 28th anniversary of the Employee
Retirement Income Security Act (ERISA), which protects the integrity of private
pension, health, and other employee benefit plans. While these hallmark worker
protection laws have endured, many new and difficult issues have arisen as
dynamic and complex changes transform Americas workforce.
Serving the Public
In furthering the economic security and welfare of workers and
families, the Department utilizes a multi-pronged approach, which includes
compliance assistance, education, private/public partnerships and, should this
approach fail, a balanced, consistent enforcement program. The Department
involves all segments of business and industrycontractors, manufacturers,
retailers, consumers, worker advocacy groups, financial and health care
communities, and unionsin advancing the economic well being of the
Nations workers. The DOL organizations dedicated to achieving this goal
are the Employment Standards Administration and the Pension and Welfare
Benefits Administration. Both agencies have developed programs that assist
businesses and other organizations subject to DOLs regulations to comply
with their provisions through public education and outreach, as opposed to
limiting their efforts to traditional enforcement techniques that detect
violations after workers have suffered harm.
The Department devotes significant resources to increasing public
access to vital information that enables individuals and practitioners to
better understand and monitor their rights under the law. Each year, the
Department distributes thousands of publications and pamphlets that provide
basic information about voluntary compliance, and staff participate in hundreds
of educational meetings, conferences, and seminars as part of the DOL outreach
effort. More recently, the Department has experimented with voluntary
correction programs that have been well received by the regulated community,
such as the Voluntary Fiduciary Correction Program and the Delinquent Filer
Voluntary Compliance program.
In support of the enforcement of laws designed to guarantee an honest
days pay for an honest days work, DOL engages in strategic
partnerships with employer associations, multi-establishment employers,
commercial consumers, the States, and intermediaries non-governmental
agencies and organizations such as faith-based groups, unions, and other social
service organizations with direct contact with workers, especially low-wage
workers and those facing language barriers. DOL has an ongoing relationship
with the National Interfaith Committee for Worker Justice, and
projectssuch as including labor and safety issues in church bulletin
insertsare underway.
In addition, the Department collaborates with the Small Business
Administration, the U.S. Chamber of Commerce and Merrill Lynch by co-sponsoring
an interactive website, www.selectaretirementplan.org, which is a tool to help
small business owners determine what type of pension or retirement savings
would best fit their companies needs. The Department also has a
longstanding partnership with the American Savings Education Council in an
effort to encourage Americans to better prepare for retirement through savings.
Finally, DOL works closely with State insurance commissioners to educate health
benefit plan professionals and employers on the changing health benefit laws,
bringing together representatives of the Department, other Federal agencies,
and the State insurance offices.
Program Costs
The FY 2002 net costs for Outcome Goal 2.1, at $350 million, represent
the compliance assistance and enforcement efforts of both the Employment
Standards Administration, which is responsible for upholding minimum wage,
overtime and other workplace standards and the safeguarding of union democracy;
and the Pension and Welfare Benefits Administration, which is responsible for
oversight of pension and health benefit plans. The increase in costs supported
improving workers security in the following areas: responsibilities in
the health care arena resulting from laws passed between 1996 and 1998;
enhanced electronic filing and compliance assistance for the ERISA Filing
Acceptance System; expansion of a nationwide toll-free help line offering
information about Federal minimum wage, overtime, child labor, and record
keeping requirements; enhancement of compliance assistance activities for low
wage industries; and electronic filing and internet disclosure of union annual
financial reports. In addition, the Department fully implemented the Orphan
Plan initiative, which identifies pension plans that have been abandoned by
fiduciaries through death, neglect, bankruptcy, or incarceration, and preserves
the assets for the benefit of the plans participants.
Text version
DOL Challenges for the Future
The primary challenge for DOLs worker protection agencies in the
21st Century will be to ensure that the protections are appropriate for and
keep pace with the changes occurring in the American workforce. The private
pension system is essential to the security of American workers, retirees and
their families. The Department must raise the confidence of the American
workforce in the security of their retirement savings by strengthening the
pension system, without unnecessarily limiting employers willingness to
establish and maintain plans for their workers or employees freedom to
direct their own savings. Virtual workplaces, aging workers, increased numbers
of women and minorities in the workforce, immigration, organized labor, the
growth of small businesses, and the ongoing shift from a manufacturing to a
service economy will all be important factors as U.S. businesses strive to
comply with worker protection laws in the future. The use of technology assists
the Department to more effectively inform employers of their obligations and to
protect workers benefits and rights. Toll-free customer service
Help Desks and on-line advisors provide new opportunities for
interactive assistance between the Department and its customers.
Covered American workplaces legally, fairly, and safely employ and
compensate their workers as indicated by:
- Reducing employer violation recidivism.
- Increasing compliance in industries with chronic violations, i.e.,
garment manufacturing, long-term health care and agriculture.
Results:The goal has been substantially achieved. The two
sub-objectives contain 18 indicators; performance for 16 indicators was fully
achieved, and not achieved for two others. However, the two indicators not
achieved involved the garment industry in New York City, which was
significantly impacted by the terrorist attacks of September 11, 2001.
Program Description: DOL administers and enforces a number of
Federal statutes that establish minimum standards for wages and working
conditions, including the Fair Labor Standards Act (FLSA), the Migrant and
Seasonal Agricultural Worker Protection Act (MSPA), the Family and Medical
Leave Act (FMLA), certain provisions under the Immigration and Nationality Act,
and various government contract laws.
This goal includes two sub-objectives, with various indicators to
measure progress. A specific analysis of the results, strategies, and future
plans by indicator follows.
1. Reduce employer violation recidivism. In FY 2002, establish
baselines for the percentage of reinvestigations without violations; percentage
of reinvestigations with any violation; and percentage of reinvestigations with
identical violations.
Results: This performance indicator was achieved.
Analysis of Results: In FY 2002, DOL completed 4,942
reinvestigations of employers who had been the subject of an earlier DOL
enforcement action. The employers may or may not have violated DOL standards
when previously investigated. Of the total reinvestigations, 1,677 (34 percent)
found no violations. Of the remaining 3,265 reinvestigations in which
violations were found, 1,242 (25 percent) of the employers continued to violate
one or more of the statutes administered by DOL. Another 938 employers (19
percent) committed violations identical to those identified during the previous
enforcement action. DOL laws protect over 130 million workers in more than 7
million workplaces. Given available investigative resources, DOL is working to
improve the effectiveness of its compliance assistance program and enforcement
interventions to help ensure that employers subject to an investigation
understand the law and compensate their employees as required. Recidivism data
will assist the Department to develop more effective compliance assistance
programs and materials, and will provide the opportunity for targeted
enforcement interventions against serious and repeat violators.
Strategies: DOL is implementing a number of strategies to
decrease the number of employers that fail to compensate employees according to
the law, especially those that commit identical violations. For example, the
Department will offer a revised comprehensive education program, including
technology-based compliance assistance. DOL also provides compliance assistance
on all applicable statutes during the conduct of an investigation; secures
specific commitments for future compliance following an intervention; and
obtains commitments for corporate-wide compliance by multi-establishment
employers following a history of interventions. The Department assesses
penalties, pursues litigation and prosecution, and publicizes the consequences
of non-compliant behavior for willful and repeat violators.
Goal Assessment and Future Plans: DOL has set the following
modest improvement goals for FY 2003:
- Increase the percentage of reinvestigations without any violations by
two percentage points; and
- Decrease the percentage of prior violators with identical violations
by two percentage points.
In recognition of the agencys core complaint work and to add a
customer-focused goal to address the timely resolution of employee complaints,
in FY 2003 DOL has established a new goal to decrease the average number of
days to conclude a complaint by two percent.
2. Increase compliance in industries with chronic violations,
including garment manufacturing, the long-term health care industry, and
agriculture
In FY 2002, the Department established a number of indicators on an
industry-by-industry basis that, according to our performance data, relate
directly to overall compliance in the industries. Successful achievement of the
targets for these indicators will have a positive impact on overall industry
compliance that will be measured in subsequent fiscal years.
Background:The indicators for this sub-objective measure
progress toward improving conditions in industries with significant historical
levels of non-compliance. The factors that originally led the Department to
target these industriesincreasing reliance on immigrant and minority
workforces, intense external competitive pressures and high turnover
ratesremain prevalent today, and continue to influence the compensation
of workers in these industries.
The major garment centers in the U.S. are in New York City and southern
California. According to BLS data, in July 2002 the garment industry employed
approximately 525,000 workers in the U.S.down from just over one million
in January 1990. These garment workers are mostly immigrant (both legal and
illegal), vulnerable to exploitation and unlikely to complain about unsafe
working conditions and failure to receive wages. The 525,000 figure does not,
however, include what is believed to be a relatively large number of workers in
the underground economy in areas where the garment industry is most
unstable.
Several investigation-based compliance surveys in garment manufacturing
in recent years have determined that low levels of these employers compensate
their workers as required by law. In southern California, the latest survey in
2000 found only 33 percent of the contractor shops in compliance; a 2001 survey
in New York City found 52 percent in compliance. With respect to the employees,
63 percent of southern California and 62 percent of New York City garment
workers received proper wages. The Departments surveys have also provided
data showing that monitoring of contractor shops by manufacturers improves
compliance, that new contractors are less likely to comply with the law, and
that employees paid off the payrolls are more likely to be
under-compensated.
The long-term health care industrywhich employs 2.3 million
workersis one of the fastest growing in the country. BLS projects that
the industry will add 1.1 million jobs in healthcare support occupations by
2010, in part because of the aging population. The nursing home industry
hasover the last several yearssuffered increasingly common staffing
shortages, bankruptcies, and limits on government reimbursements, and these
pressures contribute to overtime violations.
As in garment manufacturing, DOL has been conducting
investigation-based compliance surveys in the long-term health care industry. A
2001 survey of residential care facilities found 60 percent of employers in
compliance with the FLSA; a 2000 survey of nursing homes found 40 percent.
These surveys found that 86 percent of the employees in residential care and 89
percent in nursing homes were paid or employed in compliance. Most employers
that violated the law had failed to pay required overtime.
Since 1990, DOL has been targeting the agriculture industry in an
effort to increase compliance. The U.S. is harvesting more labor-intensive
crops, such as vegetables, fruits, nuts, and berries, than ever before. The
workers wages are low, and the work is seasonal and sporadic. Because of
the migratory nature of the work, workers are often transported by others and
housed in temporary quarters.
The Justice and Equality in
the Workplace Partnership informs Latino workers about their rights in the
workplace by raising awareness of U.S. labor laws and available remedies.
DOLs Wage and Hour Division in partnership with the Equal Opportunity
Commission, the Mexican Consulate, and the Mexican American Legal Defense and
Educational Fund launched a very successful media campaign in the Houston area.
A hot line staffed by the Mexican Consulate handles primarily Wage and Hour
questions and issues, resulting in the restoration so far of nearly $730,000 in
wages to almost 1,400 workers. The success of the Partnership led to a recent
expansion. New partners include DOLs Occupational Safety and Health
Administration, several additional Consulates from Latin American nations, the
Galveston-Houston Diocese, and the National Interfaith Committee for Worker
Justice. |
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DOLs initial approach was to improve compliance in identified
agricultural commodities, such as tomatoes, cucumbers, garlic, lettuce and
onions. As in the other industries with chronic violations, DOL conducted
investigation-based compliance surveys in these commodities. These surveys all
found low levels of compliance with the disclosure, housing, wages and
transportation provisions of MSPA, which have the greatest impact on
agricultural workers. Throughout the 1990s, investigations in other
commodities found similar violations, and DOL therefore changed its focus in FY
2002 from identified commodities to compliance with the disclosure, housing,
wages and transportation provisions in labor-intensive agriculture.
For all three industries with chronic violations (previously identified
as low-wage industries), DOL now measures the number of employees
paid or employed in compliance as well as the number of employers in
compliance.
An industry-specific analysis of the indicator targets follows.
Garment Manufacturing Results: All three
indicators for southern California were achieved; the two indicators for New
York City were not achieved.
Southern California Garment Industry
Increase by 2 percentage points the number of manufacturers that
monitor their contractor shops for compliance in southern California
Analysis of Results: In FY 2002, 53 percent of the manufacturers
contacted were monitoringan increase of 12 percentage points over the FY
2001 measure (41 percent). In the FY 2000 investigation-based compliance
surveys in southern California, DOL found that the level of compliance for
contractor shops effectively monitored by their manufacturers was 44 percent
compared to 11 percent for shops not monitored.
Strategies: Several strategies were implemented to encourage
manufacturers to monitor. DOL made face-to-face visits with manufacturers to
discuss and obtain an agreement to implement an effective monitoring program or
improve an existing program. If these manufacturers initiate or improve
monitoring practices, an estimated 500 or more contractors in the Los Angeles
Basin could be affected. DOL also conducted monitoring training sessions,
including two in the Korean language.
Increase by 2 percent the average number of monitoring components
used by manufacturers in monitoring their contractors for compliance
Analysis of Results: In addition to a higher level of compliance
for contractors shops monitored by their manufacturers, DOLs
investigative surveys showed that more effective monitoringespecially
payroll reviews and unannounced visitsimproved the level of compliance
even more. During the visits to manufacturers, training seminars, and
investigations discussed above, DOL emphasized the effectiveness of monitoring.
In FY 2001, the average number of elements was 5.5 (out of the possible eight).
In FY 2002, the average number of elements used by those manufacturers that
monitored their shops for compliance was 6.37 (a 15 percent increase),
exceeding the target. A further analysis of the data shows that 84 percent of
the manufacturers that monitored conducted unannounced visits (an increase from
67 percent in 2001) and 84 percent conducted payroll reviews (a decrease from
88 percent in 2001).
Increase by 2 percentage points the percentage of contractors in
southern California that pay all employees on the payroll
Analysis of Results: The 2000 survey in southern California
found that 63 percent of the contractors investigated paid all their employees
on the payroll. The cases subject to measurement in FY 2002 found that 92
percent of the contractors were paying their employees on the payroll,
exceeding the target. The 2000 survey found that those shops paying employees
on the payroll were more likely to be in compliance. None of the
shops paying employees off the payroll were found in compliance
during the 2000 survey.
Strategies: The FY 2002 Contractor Compliance Assistance Program
included visits to garment contractors employing 6,932 production workers. DOL
also conducted compliance assistance seminars, emphasizing the benefits for
paying workers on the payroll. Enforcement included 25
investigations to gauge the effectiveness of the Contractor Compliance
Assistance Program, and 48 percent of the shops were in compliance
higher than the level determined in the 2000 survey.
New York Garment Industry
Increase by 4 percentage points the level of compliance of new
contractors in New York City through compliance education
Analysis of Results: The 2001 New York City compliance survey
found 51 percent of new contractors compensated their employees in compliance
with the law. In FY 2002, DOL found that six of 14 new contractors (43 percent)
participating in the NYC Compliance Assistance Program for New Contractors were
in compliance and the indicator, therefore, was not achieved. Although the
target was not met, the findings represent an improvement over the 1999 survey,
when contractors in business for 2 years or less had compliance rates of 25
percent compared to the rate of 52 percent for those in business longer than 2
years. Although not quantifiable, the terrorist attacks of September 11, 2001,
significantly impacted the viability of the New York City garment industry and
DOLs efforts to increase compliance.
Strategies: In conjunction with the payroll audit phase of the
Compliance Assistance Program for New Contractors, DOL contacted shops newly
registered by New York State. Only about half participated in an audit, during
which DOL provided materials on compliance, reviewed payroll records, and
recommended corrective action, if appropriate. Of the 14 shops randomly
selected for investigation in the second phase, six (43 percent) paid their
workers in compliance with the law. Other compliance assistance targeting new
contractors included IRS and SBA outreach events in garment districts.
Increase by 2 percentage points the number of contractors in New
York City that pay all employees on the payroll
Analysis of Results: The 2001 New York City compliance survey
found 52 percent of the contractors paid employees on the payroll.
In FY 2002, only 43 percent (31 of 72 contractors) paid their employees
on the payroll, and the indicator was therefore not achieved. A
large proportion of the contractors investigated during FY 2002 engaged in
business with manufacturers with a history of hot goods violations,
were located in geographic areas where violations are prevalent, or were
investigated as a result of potential indications of violations. As a
consequence, the compliance level could be expected to be less than the 2001
baseline developed from a random sampling of all registered contractors in New
York State.
Strategies: DOL was an active participant in the New York City
Apparel Industry Compliance Program, including improving the contractor
screening tool for training, helping to develop the training syllabus, and
conducting contractor training. Also, DOL conducted training seminars for
contractors identified as a result of hot goods investigations of
manufacturers. In addition, DOL collaborated with the State of New York
Department of Labor, referring cases to the New York State Attorney
Generals Office for consideration of criminal prosecution against
contractors that paid employees off the payroll.
Goal Assessment and Future Plans: DOL will add an objective for garment
manufacturers in southern California: establish a baseline of the percent of
employees paid on the payroll. In New York City, DOL will continue
efforts to increase the number of garment employees who are paid on the
payroll and add an objective: increase by 2 percent the number of
manufacturers that monitor their contractor shops for compliance.
Long-Term Health Care Results: All three indicators
were achieved.
Increase by 6,000 the number of employees of multi-establishment
nursing home corporations impacted by corporate proactive steps such as
training and self-audits.
Analysis of Results: In FY 2002, DOL finalized an agreement with
one of the major nursing home chains that provides for proactive steps to
promote FLSA compliance among their multiple establishments. Alterra Health
Care is a multi-state nursing home enterprise with some 400 facilities, and
employs 12,500 full and part time employees. The enterprise has agreed to
undertake internal monitoring of FLSA compliance in its facilities and agreed
to a program of training and enterprise-wide compliance assistance. Also, a
California-based nursing home chain, Pleasant Care Corporation, entered into a
consent judgement with the Department, and agreed to, among other things,
cooperate with DOL in developing a program of corporate training and
self-monitoring to compensate its 3,926 employees as required by law.
Altogether, an additional 16,426 employees will benefit from these
agreements.
Strategies: DOL developed a proactive compliance assistance
program to encourage corporations, their management staff, and facility
operators to prioritize paying wages and setting work hours that comply with
the FLSA. This strategy maximizes the impact of the laws and prevents
violations before they occur. Litigation was also used as a strategy to compel
recidivist employers to take responsibility for corporate-wide compliance.
Increase by 5 percent the number of employers (nursing homes) that
were provided compliance assistance information through seminars and other
outreach efforts.
Analysis of Results: DOL provided compliance assistance in FY
2002 to 7,681 employers in the nursing home industry either through mailings,
seminars or during conference exhibits, a 215 percent increase over the 2,437
employers reached in FY 2001.
Strategies: During FY 2002, DOL offices developed seminars for
health care employers; attended seminars; staffed booths at national and
regional association conferences; and sent mailings to nursing home
establishments. DOL reached out to human resources professionals and nursing
home administrators in an effort to educate those individuals in a position to
impact compliance. The agency also collaborated with State agencies and
employer associations to maximize the impact of compliance assistance and
effectively utilize agency resources.
Establish a baseline of the number of employers (residential
living/group homes) in compliance with the record keeping requirements of the
Fair Labor Standards Act
Analysis of Results: Seventy-seven percent of employers in the
residential living (group home) segment of the health care industry complied
with the record keeping requirements. Employers in the residential living
segment of the long-term care industry often fail to accurately record the
number of hours that employees work, and pay caregivers a flat per week or per
month rate regardless of the number of hours worked. As a result, employers may
fail to compensate workers for overtime hours worked. Improvements in record
keeping should result in increased compliance with the FLSA overtime
provisions. However, since the baseline data are drawn from employers selected
for investigation for a variety of reasons, including previous history of
violations, the data are not reflective of record keeping compliance in the
industry as a whole.
Goal Assessment and Future Plans: In FY 2003, in the nursing
home segment of the industry, DOL will seek to increase the number of employees
paid in compliance with FLSA. Hand-in-hand with this objective, DOL has
established a customer satisfaction objective to increase the percentage of
nursing home complaint cases concluded in 180 days.
Agriculture Results: The seven indicator
targets were achieved.
Establish baselines of compliance with the Migrant and Seasonal
Agricultural Worker Protection Act (MSPA) provision of disclosure, wages,
housing and transportation and with the child labor provisions of the Fair
Labor Standards Act relative to selective agricultural commodities in various
locations in the U.S.
Analysis of Results: During 2002, DOL completed 2,012 cases in
agricultural hand-harvested industries, and identified MSPA findings in 1,337
investigations of some 38 different commodities. Investigation findings were
analyzed to determine the level of compliance with the four core MSPA
provisions that provide the greatest protections for agricultural workers
disclosure, wages, housing and transportation. The data provided the
following percentages of investigated employers in compliance.
Text version
MSPA Provision |
Percent of Employers in Compliance with
Provision |
Disclosure |
61% |
Wages |
91% |
Housing Safety and Health Transportation |
74% |
Vehicle Safety |
88% |
Proper Driver License |
90% |
Proper Vehicle Insurance |
85% |
Of the total agricultural investigations completed, 40 found child
labor violations.
Text version
FLSA Child Labor Protection |
Percent of Employers in Compliance with Child Labor
Provisions |
98% |
Number of Agricultural Investigations in Which Child Labor
Violations Found |
40 |
Number of Minors Employed in Violations |
157 |
The percentage of contractors found in compliance with the MSPA housing
provisions are drawn from the agencys database of investigations. These
percentages are not intended to represent the levels of compliance in the
industry, since nearly 95 percent of the completed cases targeted employers in
commodities like tomatoes, onions, lettuce and cucumbers that have been the
focus of the agencys compliance efforts or had a history of prior
violations. The data do, however, provide the agency with a relative
perspective on which of the MSPA critical provisions are most commonly violated
and thus, where the agency should direct its resources. The data also support
the agencys decision to shift from a commodity-based targeting strategy
to a targeting strategy more closely based on the statutory provisions.
Goal Assessment and Future Plans: Based on the analysis of the
FY 2002 data, DOL will direct its FY 2003 compliance assistance and enforcement
resources to increasing employer compliance with the MSPA housing safety and
health standards.
(Goal 2.1A FY 2002 Annual Performance Plan)
Increase Compliance with Worker Protection Laws
Advance safeguards for union financial integrity and democracy and
the transparency of union operations as indicated by:
- Improving the timeliness of union financial reports that contain
information sufficient for public disclosure. In FY 2002, initiate a new
electronic forms application and electronic submission system and establish a
baseline for timely filing under the new process.
- Extending Labor-Management Reporting and Disclosure Act (LMRDA)
protections for union financial integrity to a greater number of labor
organizations through the more effective use of investigative resources. In FY
2002, establish a baseline of the percentage of investigative resources applied
to criminal investigations that result in convictions.
Results: The goal was achieved. The Department issued electronic
reporting formats for union annual financial reports in January 2002 and
implemented the electronic submission process in July. The Department
established a baseline for the timely filing of union reports under this new
system: 44 percent of unions with annual receipts greater than $200,000 timely
filed union financial reports for public disclosure access.
The Department established a baseline of 50 percent for the percentage
of investigative resources applied to criminal cases that result in
convictions, as an indicator of efficiency in extending financial integrity
protections to labor organizations.
In June 2002, DOL began making annual
financial reports of labor organizations available on the DOL website.
(http://unionreports.dol.gov/olmsweb/docs/formspg.html). By simplifying access
to financial reports, this program helps increase union transparency and
accountability. Reports back to 2000 can now be examined and printed free of
charge. Users can search data in the reports using specific criteria such as
receipts, assets, disbursements, and liabilities. Users can also conduct
searches by name or union for information on union officers or
employees. |
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Program Description: Through its administration and enforcement
of the Labor-Management Reporting and Disclosure Act (LMRDA), DOLs
Employment Standards Administration (ESA) safeguards union democracy and
financial integrity and the transparency of union operations. The LMRDA
requires reporting by unions and other covered entities for the purpose of
public disclosure; establishes certain standards for union officer elections;
and provides certain union financial integrity protections, including criminal
provisions for the embezzlement of union funds. In carrying out its
responsibilities under the LMRDA, ESA performs four types of activities:
civil and criminal investigations and enforcement actions; union compliance
audits; reports/public disclosure administration; and compliance
assistance.
Analysis of Results: The filing of timely and accurate financial
reports by unions remains a critical objective of the LMRDA program to
safeguard union democracy and financial integrity. The electronic reporting
format will substantially improve reporting compliance by unions through
automated error checks, error summary reports, and increased ease of filing.
Increasing compliance with reporting requirements will significantly expand
public access to filed union reports via the Internet. In analyzing the
baseline of 44 percent timely report filings, the Department noted that there
was a substantial mail delay, which at one point during FY 2002 amounted to two
weeks, as a result of postal security procedures implemented following anthrax
incidents. In FY 2002, 85 percent of reports required of unions with receipts
greater than $200,000 were received within 14 days after the due date. Although
every late submission cannot be attributed to mail delays, this circumstance
did have a substantial impact on the timely filing rate.
Performance data with respect to criminal investigations are
continually reviewed to enhance the effectiveness of agency efforts to advance
LMRDA union financial integrity protections.
Strategies: The Department employs a variety of partnership,
compliance assistance, and enforcement strategies to achieve timely and
accurate reporting by unions, and these will continue in FY 2003. These
strategies include reminding unions delinquent in the prior year to file their
reports on time and establishing partnerships with international unions to
promote timely report filing by their affiliates. DOL will emphasize expanded
use of the electronic forms in order to ensure reporting completeness and
accuracy.
The Department will seek greater efficiency in conducting criminal
investigations to optimize the use of agency resources in extending financial
integrity protections to more labor organizations. Compliance assistance and
liaison with union officials, as well as union audits, will complement criminal
investigations and enforcement as essential components of a balanced strategy
to advance union financial integrity protections.
Goal Assessment and Future Plans: The Department plans to
implement a goal to improve the completeness and accuracy of filed reports
following the development of baseline information in FY 2003. In addition, DOL
plans to expand the goal to address in a more comprehensive manner the LMRDA
programs missions to ensure union democracy and financial integrity.
n
(Goal 2.1B FY 2002 Annual Performance Plan)
Provide For Secure Pension Plans
Increase by 5% per year (to 1,993) the number of closed fiduciary
investigations of employee pension plans where assets are restored, prohibited
transactions are corrected, participant benefits are restored, or plan assets
are protected from mismanagement and risk of future loss is reduced.
Results: The Department substantially achieved this goal,
increasing by 4.5 percent (to 1,985) the number of closed fiduciary
investigations where assets were restored, prohibited transactions were
corrected, participant benefits were restored, or plan assets were protected
from mismanagement and the risk of future loss was reduced.
Program Description: When a fiduciarys mismanagement of
assets or imprudent administration places pension benefits at risk, the
Departments Pension and Welfare Benefits Administration (PWBA) acts on
behalf of plan beneficiaries to minimize potential loss or to restore losses to
the plan. Increasing the number of cases with fiduciary results demonstrates
the Departments success in protecting plan assets. PWBA oversees the
benefit security of a universe of 6 million plans, 150 million participants and
beneficiaries, and approximately $4.8 trillion in assets.
Analysis of Results: During the past year, the Department
continued to improve the quality of cases selected for investigation as
demonstrated by the continuing increases in the number of cases closed with
fiduciary results, a primary strategy for achieving the goal. In FY 2002, the
Department restored approximately $690 million to pension plans as a result of
its investigative efforts assets that might otherwise have been lost to
participants and beneficiaries. While monetary recoveries may fluctuate
significantly and past performance cannot predict future performance in any
given year, recoveries have followed a generally upward trend over the past
several years. During FY 2002, the Department opened a number of high profile,
resource intensive, pension investigations with far reaching effects on the
participant benefits community. These high profile cases resulted in numerous
staff being dedicated to a single case. In addition, FY 2002 results were
impacted by the Health Disclosure and Claims Initiative (HDCI) which began in
FY 2001 and concluded in early FY 2002. More details on the HDCI may be found
in Goal 2.1D and Appendix 3. The HDCI was a major program emphasis in FY 2001
and ultimately continued to impact pension case results into FY 2002.
PWBAs Enforcement Management System (EMS) provides the data used
to measure the achievement of this goal, and the Department has confidence in
the accuracy and reliability of the data. OIG conducts regular reviews of the
EMS system and PWBA has continually received high marks for its system of
checks and balances to ensure high quality data. In addition, individuals not
involved directly with the data input or the investigation must approve case
openings. Cases with monetary results ultimately receive scrutiny throughout
the management hierarchy including national office oversight and review.
Text version
Strategies: During FY 2002, regional offices continued to employ
more effective targeting techniques to increase the number of cases converted
from limited reviews to investigations which identify possible fiduciary or
criminal violations. These techniques included: using special
computer-generated targeting reports to aid the analysis of specific types of
plans or investment/asset categories; working directly with financial
institutions to identify plans which may have a delinquent contribution problem
or which may have been abandoned by responsible plan officials; targeting
issues that were prevalent in specific jurisdictions, then sharing successful
strategies nationally for consideration by other regions; and leveraging
limited investigative resources through continued use of the Case Opening and
Results Analysis (CORA) initiative to refine our efforts at identifying quality
cases and their sources.
PWBA also strives to ensure that stakeholders plan professionals
and participants are empowered with knowledge to comply with the law
and/or to make personal choices.
Audits and Program Evaluations: The General Accounting Office
conducted an evaluation of the enforcement program and found, in general, that
the Pension and Welfare Benefits Administration is a well-managed program.
Further details of the evaluation and specific recommendations may be found in
Appendix 3.
Goal Assessment and Future Plans: Developing a quantifiable
outcome goal to measure PWBAs success is extremely challenging. The
Department has developed a combination of new performance indices for FY 2003
which, considered collectively, will better communicate PWBAs
performance. In developing these indices, PWBA intends to: (1) maintain maximum
flexibility for the Secretary to make policy judgments regarding enforcement,
compliance assistance, outreach and education; (2) reflect effectiveness in
achieving these policy choices; (3) avoid unintended incentives (i.e. complex
v. easy, monetary v. non-monetary recovery, big v. small plans, health v.
pension); and (4) measure a multitude of diverse strategies (e.g.
education/outreach, technical assistance, enforcement). These indices, coupled
with additional statistical and underlying management information, will measure
the effectiveness of DOLs program in enhancing benefit and retirement
security.
Between January 1996
and March 2002, a small business owner operated a financial planning,
investment, and insurance firm that provided investment management services to
individuals as well as employee benefit plans. The firm also conducted business
with numerous companies that sponsored 401(k) benefit plans. One plan had
transferred approximately $472,000 in plan assets for intended investment in
insurance and annuities. These funds were never deposited; instead, the
firms owner retained them for his own personal use, including speculative
stock trading and gambling. This practice was prevalent throughout the
firms operations, impacting elderly clients life savings as well as
those covered by benefit plans. The Departments intervention resulted in
the firms operator being sentenced to 87 months in prison and ordered to
pay restitution of over $4 million to more than 50 pension plan
victims. |
(Goal 2.1C FY 2002 Annual Performance Plan)
Provide for Secure Health and Welfare Plans
Increase by 5% per year (to 620) the number of closed fiduciary
investigations of employee health and welfare plans where assets are restored,
prohibited transactions are corrected, participant benefits are restored, plan
assets are protected from mismanagement, and risk of future loss is reduced.
Results: This goal was exceeded. The Department increased by 51
percent the number of closed fiduciary investigations where assets were
restored, prohibited actions were corrected, participant benefits were
restored, or plan assets were protected from mismanagement, and risk of future
loss was reduced.
Program Description: The Departments role in the health
care arena has expanded as a result of the enactment of legislation that
includes regulatory and enforcement requirements to be implemented by the
Pension and Welfare Benefits Administration (PWBA). The Department exercises
leadership and oversight to protect the interests of in excess of 150 million
participants and beneficiaries by ensuring the financial solvency and prudent
operations of approximately 6 million health and welfare plans. When a
fiduciarys mismanagement of assets or imprudent administration places
health and welfare benefits at risk, the Department acts on behalf of the
plans beneficiaries to minimize potential loss of benefits or to restore
losses to the plan.
Several subsidiaries
of a company filed for bankruptcy while one subsidiary continued to operate and
maintain its health plan. As a result of the bankruptcy, hundreds of retirees
from the bankrupted subsidiaries were at risk of losing their health insurance.
The health plan of the remaining subsidiary denied that they were responsible
for offering COBRA insurance coverage to the retirees of the bankrupted
subsidiaries. The Departments Pension and Welfare Benefits
Administration, in coordination with the Internal Revenue Service, conducted
several compliance assistance sessions and explained to the employer that the
remaining subsidiarys health plan was responsible for offering COBRA
insurance to the affected retirees, retroactive to the date of the bankruptcy.
The health plan attorneys thanked the Department for their compliance
assistance on these issues. As a result of the Departments intervention,
the employer agreed to send out COBRA notices to the retirees offering them the
opportunity to elect COBRA coverage.. |
Analysis of Results: The Departments Health Disclosure and
Claims Initiative (HDCI) introduced during FY 2001 continued to play a role in
the increase in health plan investigations closed with positive results. In
recent years, DOL has dedicated substantial enforcement resources to the
targeting and investigation of both civil and criminal violations relating to
health benefit plans, and the Health Disclosure and Claims Initiative expanded
the Departments sources of information about plans that merit attention.
As was indicated in the FY 2001 Annual Report on Performance and
Accountability, the Department anticipated that the Health Disclosure and
Claims Initiative would continue to have positive impact into FY 2002. In FY
2002, the Department restored approximately $140 million, or an increase of 112
percent over FY 2001, to benefit plans or directly to participants as a result
of its investigative efforts assets that, in the absence of
investigative efforts, may have been lost. Monetary recoveries may fluctuate
significantly and past performance cannot predict future performance in any
given year, but recoveries have followed a generally upward trend over the past
several years. PWBAs Enforcement Management System (EMS) provides the
data used to measure the achievement of this goal, and the Department has
confidence in the accuracy and reliability of the data. The system checks
described in Goal 2.1C also apply to the data used to measure this goal.
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Audits and Program Evaluations: The
General Accounting Office program evaluation referenced in Goal 2.1C
and further detailed in Appendix 3 also relate to this goal. In addition, the
HDCI evaluation and further details may be found in Appendix 3.
Goal Assessment and Future Plans: See discussion under Goal
2.1C.
(Goal 2.1D FY 2002 Annual Performance Plan)
In September Secretary of
Labor Elaine L. Chao released the final report of the 2002 National Summit on
Retirement Savings with a message to all generations of Americans to save for a
secure retirement. The Summit report contains important findings and
recommendations targeted to various generations to improve education as a way
to increase retirement security. In breakout sessions, the Summit participants
examined the differences in attitudes, behaviors and concerns important to
generations and at specific life stages. The final report includes messages and
approaches for educating various generational groups developed by each breakout
session. It is available on on DOLs website at:
http://www.dol.gov/pwba/PDF/SummitFinalReport.pdf |
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