Promote the Economic Security of Workers and Families
Protecting workers' wages and working conditions, providing unemployment
compensation and other benefits when workers are unable to work, and retirement
and health benefit security are central to the DOL mission. This strategic
goal captures these priorities and consists of two outcome goals: Increase
Compliance With Worker Protection Laws, which focuses on safeguarding
employees' wages, working conditions, and union democracy and financial
integrity; and Protect Worker Benefits, which deals with relief
in the form of unemployment, disability, and pension and health care insurance
benefits. Agencies supporting this strategic goal are the Employment and
Training Administration (ETA), the Employment Standards Administration (ESA),
the Employee Benefits Security Administration (EBSA), and the Pension Benefits
Guaranty Corporation (PBGC).
Outcome goals 2.1 and 2.2 contain six performance goals (see table below),
of which two were achieved, two substantially achieved and two not achieved
in FY 2004. The Department performed well, with significant progress in improving
worker protection and union compliance, recovery of erroneous payment of
unemployment benefits, improved effectiveness of pension and health benefit
plan enforcement and workers' compensation program administration. Results
for several performance indicators were shy of their targets but there were
no major disappointments or reversals in our workforce security performance
this past year.
Outcome Goal 2.1 Increase Compliance With Worker
Protection Laws
1 performance goal achieved & 1 substantially
achieved
|
ESA Wage and Hour Division (2.1A) substantially achieved |
The Department reached targets for increasing compliance with the Fair Labor
Standards Act (FLSA) in the chronically delinquent garment manufacturing,
long-term health care, and agricultural commodities industries. The target
to reduce recidivism of prior FLSA violators was not reached, however. |
ESA Office of Labor Management Standards (2.1B) achieved |
The Department reached targets to increase unions' financial integrity
and transparency. |
Outcome Goal 2.2 Protect Worker Benefits
1 performance goal achieved,
1 substantially achieved & 2 not achieved
|
ETA Unemployment Insurance (2.2A) not achieved |
ETA reached targets for recovery of estimated overpayments, facilitating reemployment
and establishing tax accounts but failed to reach its target for timeliness
of first payments. |
EBSA Pension and Health Benefit Security (2.2B) achieved |
EBSA reached all targets, including those for successful conduct of civil and
criminal cases against benefit plan malfeasance, and customer satisfaction
with participant assistance received. |
ESA Office of Worker Compensation Programs (2.2C) substantially achieved |
ESA reached nine of ten targets. ESA reduced the lost production days for USPS
employees, but failed to do so across the Government. ESA also kept Federal
Employee Compensation Act medical costs inflation below the national
healthcare inflation rate and reached targets for the timeliness of processing
Energy Employees Occupational Illness Compensation initial claims. |
PBGC Pension Plan customer satisfaction (2.2D) not achieved |
PBGC reached its target for customer satisfaction of participants in trusteed
plans but not for sponsors of covered plans. |
The following charts illustrate DOL's strategic goal net costs in FY 2004,
with A Secure Workforce shares set apart. The first allocates total
Departmental costs of $56.676 billion; the second allocates an adjusted net
cost of $11.102 billion that excludes major non-discretionary items associated
with this goal.15 Net costs of this goal in FY 2003 (less Income Maintenance)
were $1.969 billion. The decrease occurred in part because of relocation
of the WIA Dislocated Worker and TAA programs from Goal 2 to Goal 1; together,
these two programs cost approximately $2 billion annually.
The outcome goals and programs listed above, along with their results, costs,
and future challenges are discussed in more detail on the following pages.
15The excluded costs are referred to as Income Maintenance unemployment
benefit payments to individuals who are laid off or out of work and seeking
employment ($41.424 billion) plus disability benefit payments to individuals
who suffered injury or illness on the job ($4.150 billion).
In a global economy, the Employment Standard Administration's (ESA)
primary challenge in building a competitive workforce is to ensure that protections
for workers are appropriate for and keep pace with the changes
occurring in the American workforce. Virtual workplaces, aging workers,
more 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.
Under the Fair Labor Standards Act, the Migrant and Seasonal Agricultural
Worker Protection Act, the Family and Medical Leave Act and the Service Contract
Act, ESA's Wage and Hour Division (WHD) administers standards for wages
and working conditions: the minimum wage, overtime, youth employment, and
field sanitation standards in the agriculture industry. Under the Davis-Bacon
Act, WHD determines prevailing wages in the construction industry. The key
to ensuring worker protections is to focus on industries and employers with
the most persistent and serious violations; to quickly resolve employee complaints;
and to ensure accuracy in established wage rates. ESA's Office of Labor-Management
Standards (OLMS) ensures union transparency, financial integrity, and democracy
by administering and enforcing the Labor-Management Reporting and Disclosure
Act (LMRDA). OLMS responsibilities under the Act include compliance assistance;
civil and criminal investigations and enforcement; union compliance audits;
and reports/public disclosure administration. OLMS' strategies are
aimed at improving timeliness and quality of union reports filed for public
disclosure and strengthening LMRDA compliance through union audits and outreach
efforts.
Goal (Agency) Period
Goal Statement [Achievement] |
Performance Summary |
2.1A (ESA) FY 2004
Covered American workplaces legally, fairly,
and safely employ and compensate their workers.
[Substantially Achieved] |
The Department reached targets for customer service and for increasing compliance
with the Fair Labor Standards Act (FLSA) in the garment manufacturing,
long-term health care, and agricultural commodities industries industries
with chronic FLSA violations. DOL did not reach its targets for
reduction of FLSA recidivism and for increasing the percent of nursing
home workers employed in compliance. The target for timely and accurate
prevailing wage determinations was reached. |
2.1B (ESA) FY 2004
Advance
safeguards for union financial integrity and democracy and the transparency
of union operations.
[Achieved] |
The Department reached targets increasing union financial integrity and for
increasing union transparency. |
"A new way of doing business, where government
goes directly to the people in an effort to better serve and
protect." This is how operation COACH (Compliance Outreach
to Asian Communities and Hispanics) has been described by
northern New Jersey local media. This innovative program has
also sparked positive response from community groups. The
Wage and Hour Division (WHD) instituted this program in December
2003 to promote awareness of WHD laws and programs in the
Asian and Hispanic communities, and to work directly with
employers and workers who traditionally have been reluctant
to seek WHD's services. Under COACH, WHD investigators have
visited over 650 businesses that employ more than 4,540 workers.
Seventy-four percent of the businesses reached were either
Asian or Hispanic owned. Fifty-nine percent of all the businesses
visited indicated that prior to COACH, they had no knowledge
of or experience with WHD. Over ninety-five percent offered
that they did not know how to reach the local WHD office or
even how to access the DOL web page. Much of the operation's
success is attributed to a non-adversarial compliance assistance
based strategy that emphasizes faceto-face contact and
bilingual investigators. |
|
Photo credit: Nancy Vazquez-Gunatilaka,
DOL Investigator |
Net Cost of Programs
FY 2004 program costs of $296 million supported ESA's
Wage and Hour Division (WHD) and Office of Labor-Management Standards
(OLMS) programs. This is an increase of 8% ($23 million) over FY 2003.
The WHD budget increased to cover operating expenses. Approximately 75
percent of WHD's resources are devoted to complaint investigations and
resolution. The success of this effort is reflected in the FY 2004 performance
results that show ESA decreased the average number of days to conclude
a complaint from 108 to 92 days.
Results Summary
DOL achieved one performance goal and substantially achieved
the other. WHD decreased the average number of days to conclude a complaint
from 108 days to 92 days, greatly improving performance, and also increased
compliance in industries with chronic violations in the garment manufacturing,
long-term health care, and agricultural commodities industries. A FY 2004
survey found 55 percent of nursing homes in compliance and 90 percent of
industry employees paid in compliance with the FLSA. WHD added ten compliance
assistance programs to the three previous ones, affecting over 900,000 agricultural
employers. Following WHD investigations 335 agricultural housing providers
corrected violations, an increase from 256 in FY 2003. WHD did not reach
its target for reduction of employer FLSA violation recidivism. The Davis-Bacon
Act (DBA) wage determination program reached targets to establish a wage
determination processing baseline and to issue 80 percent of all survey-based
DBA wage determinations within 60 days.
DOL reached both of its union financial integrity targets. OLMS established
a fraud baseline of nine percent of those unions filing reports under LMRDA;
and the percentage of union reports meeting standards of acceptability increased
in to 92 percent. Better union public disclosure reports resulted from agency
compliance assistance efforts and increasing use of electronic reporting
formats.
Future Challenges
ESA faces many challenges to meeting its goal of achieving
compliance with worker protection laws. In FY2005, WHD will continue working
within established employer partnerships; seeking new such agreements; and
continuing compliance assistance to employers and employees. WHD will also
transition to goals and measures that more fully capture compliance in a
broad spectrum of low-wage industries; continue its targeted compliance assistance
programs; continue self-directed investigations in industries with chronic
violations; and reinvestigate employers where future compliance is uncertain.
Performance success in the wage determination program depends on upgrades
in information technology. WHD is working to combine the DBA Wage Determination
Generation and Automated Survey Distribution Systems into one automated data
processing system that should greatly enhance the program's ability
to obtain, store and distribute construction wage determinations.
Covered American workplaces legally, fairly, and safely employ and compensate
their workers.
Indicators
Ensuring continued customer service by maintaining the average
number of days to conclude a complaint;
Reducing employer recidivism by increasing the percentage of prior violators
who achieved and maintained FLSA compliance following a full FLSA investigation;
Increasing compliance in industries with chronic violations; and
Ensuring timely and accurate prevailing wage determinations.
Program Perspective
ESA's Wage and Hour Division (WHD) enforces laws
establishing minimum standards for wages and working conditions. These include
the minimum wage, overtime and youth employment provisions of the Fair Labor
Standards Act; the Migrant and Seasonal Agricultural Worker Protection Act;
and the Family and Medical Leave Act. WHD is also responsible for enforcing
field sanitation standards in agriculture, and administers wage determination
provisions of the Davis-Bacon Act.
The key to ensuring worker protections is to focus on industries and employers
with the most persistent and serious violations; to resolve employee complaints
expeditiously; and to ensure that established wage rates are accurate. By
focusing compliance efforts in low-wage industries like agriculture, health
care, and garment manufacturing, WHD seeks to protect those low-wage workers
most likely to be paid less than legally required or unsafely housed. By
reducing repeat violations, WHD can achieve lasting compliance on behalf
of many employees. WHD ensures responsiveness by reducing the time it takes
to resolve employee complaints. Timely and accurate prevailing wage determinations
encourage efficiency and help ensure government contract workers receive
the wages to which they are entitled.
A number of external factors influence WHD's program outcomes. As
the supply of vulnerable immigrant workers increases, the potential for violations
increases. Compliance levels in many low-wage industries are also heavily
influenced by competitive pressures and by subcontracting arrangements in
which smaller companies have little opportunity to influence market prices.
Results, Analysis and Future Plans
The goal was substantially achieved. Eight
of ten targets were reached. The average number of days to conclude a complaint
declined from 108 days to 92 days, reaching the complaint response target.
DOL did not reach its target to reduce recidivism of prior violators; compliance
for this group fell by two percentage points from the FY 2003 baseline of
73 percent. WHD reached all but one of the targets associated with increasing
compliance in industries with chronic violations: garment manufacturing,
long-term healthcare, and agricultural commodities. In the health care industry,
WHD increased the percent of workers employed in compliance by 1.2 percentage
points just
under the 2 percentage point target. Targets and results appear in the
table below.
|
|
|
|
Achieved? |
Garment |
Increase employees "on the payroll" in NYC |
1 Percentage Point |
6 Percentage Points |
Y |
Garment |
Increase manufacturers' monitoring of their Southern CA shops |
2 Percent |
2 Percent |
Y |
Long-term Health Care |
Increase nursing home FLSA compliance |
5 Percentage Points |
15 Percentage Points |
Y |
Long-term Health Care |
Increase employees paid in compliance with FLSA |
2 Percentage Points |
1.2 Percentage Points |
N |
Agricultural Commodities |
Increase compliance among employers subject to DWHaT |
2 Percent |
Result are nearly 200 times baseline |
Y |
Agricultural Commodities |
Increase corrected housing violations after intervention |
1 Percent |
31 Percent |
Y |
WHD also reached its timely and accurate prevailing wage determinations
targets, establishing a baseline of 1491 wage determination data submission
forms processed per 1,000 hours, and issuing 86 percent (13 of 15) wage surveys
within 60 days, against a target of 80 percent.
WHD improved customer service responsiveness by updating complaint intake
procedures, regular review of complaint inventories, streamlining procedures
to ensure early contact with complainants, and through good fact development.
WHD has established three key effective strategies to increase compliance
in industries with a history of chronic FLSA violation: compliance assistance,
enforcement and collaborative partnerships. In garment manufacturing, monitoring
through unannounced visits, payroll record and timecard reviews, employee
interviews have all proven effective. In the long-term care industry, compliance
assistance, partnerships and enforcement have been effective in increasing
FLSA compliance. Across the board, compliance assistance has been effective dissemination
of industry-specific fact sheets and employee rights cards, face-to-face
employer consultations, and entering into compliance partnerships with several
major nursing homes. In the agricultural industry, targeted compliance assistance
and compliance partnerships have worked especially well. A FY 2004 partnership
with the Tennessee Farm Bureau accounts for the greatest increase of employers
impacted by a compliance partnership, with just over 500,000 members.
Over the last several years, the DBA wage determination program took steps
to improve the accuracy and timeliness of prevailing wage determinations
for the construction industry. Following OMB's PART review of the DBA
wage determination program, WHD added timeliness and accuracy performance
indicators the two aspects of the DBA wage survey program that significantly
impact wage determination performance.
WHD is using a new complaint indicator in FY 2005 and will concentrate on
the number of days it takes to resolve violation complaints. This will prevent
any unintentional emphasis on speed at the cost of finding and correcting
violations. To reduce FLSA violation recidivism, WHD will promote long-term
compliance among employers through detailed compliance agreements outlining
agreed-upon steps for compliance; and reinvestigating cases where future
compliance is uncertain. WHD will continue its transition to goals and measures
that more fully capture compliance in a broad spectrum of low-wage industries.
As a result, there will not be specific indicators for the health care and
agriculture industries. However, WHD will continue its targeted compliance
assistance programs and enforcement activities to promote housing and transportation
compliance.
Performance success in the wage determination program depends on upgrades
in information technology. WHD is working to combine the DBA Wage Determination
Generation and Automated Survey Distribution Systems into one automated data
processing system. This software development will greatly enhance the program's
ability to obtain, store and distribute construction wage determinations.
Management Issues
Data used in reporting performance against goals are derived
largely from the WHD Investigative Support and Reporting Database (WHISARD).
An independent analysis conducted by the University of Tennessee this year
found high levels of consistency between WHISARD data and case file information,
with 90% or greater consistency on 25 of the 33 data elements. Other performance
data sources are Wage Hour's statistically valid investigation-based
compliance surveys, which are tabulated and reviewed by independent sources
to ensure accuracy and completeness.
WHD has undertaken four program evaluations in FY 2004 focusing on: (1)
identifying new compliance measures in low-wage industries; (2) integrating
budget and performance information; (3) conducting a cost/benefit analysis
of recommendations to update the Youth Employment Hazardous Occupations
rules; and (4) an assessment of WHD compliance assistance efforts. WHD will
undertake two new evaluations next year: 1) the development of models to
employ common compliance strategies across low-wage industries; and 2) an
evaluation of the agency's compliance assistance web information.
In the spring of 2004, the Office of Inspector General issued a final report
on WHD's Davis-Bacon Act wage determination program. A summary of the
findings is included in Appendix 2 (Study 5). In the spring of 2003, WHD's
Davis Bacon wage determination program was assessed through a Program Assessment
Rating Tool (PART) review. The assessment found that the program did not
demonstrate results. In response, WHD has developed overarching goals to
ensure program performance improvements in determining and issuing prevailing
wage rates with specific numeric targets. In addition, WHD contracted with
an outside company to evaluate the Davis Bacon wage survey process.
When major revisions of annual reporting
requirements for labor unions were announced on October 9,
2003, DOL's Office of Labor-Management Standards (OLMS) took
extraordinary steps to make sure union officials would clearly
understand the changes. OLMS hosted 155 seminars in 44 states,
explaining to more than 5,000 union representatives the changes
designed to promote union democracy and financial safeguards
for millions of American union members. OLMS also issued 10,000
compliance guides; hosted a seminar in Washington, D.C. for
130 certified public accountants; held 29 special briefings
for international unions; set up dedicated sections on its
web site where unions can download reporting software and
Power Point presentations, and find answers to frequently
asked questions (FAQ's). OLMS has established an e-mail message
service to notify interested subscribers of new FAQ's, compliance
assistance materials, and other developments. The photo was taken
at an OLMS seminar in May for members of the Transport Workers
Union (TWU) at The George Meany Center for Labor Studies in
Silver Spring, Md. |
|
Photo credit: Jerry Frishman |
Advance safeguards for union financial integrity and democracy and the
transparency of union operations.
Indicators
Increasing union financial integrity: Baseline information on
unions with fraud will be developed and performance targets will be established;
and
Increasing union transparency. The percentage of union reports meeting standards
of acceptability for public disclosure will increase to 75%.
Program Perspective
OLMS ensures union transparency, financial integrity,
and democracy by administering and enforcing the Labor-Management Reporting
and Disclosure Act (LMRDA). The Act requires annual publicly available
union financial reports; establishes standards for union officer elections;
and imposes criminal sanctions for union fund embezzlement. OLMS assists
union compliance; conducts civil and criminal investigations, and compliance
audits; and administers public disclosure of required reports. Improving
the timeliness and quality of union reports filed for public disclosure
and strengthening compliance through audits and outreach efforts are key
strategies.
Results, Analysis and Future Plans
DOL reached both indicator targets for
this performance goal.
Union Financial Integrity
OLMS audited a randomly selected sample of reporting
unions to establish a baseline measure of union fraud. The survey established
that fraud is indicated in nine percent of unions subject to the LMRDA. An
audit finding of a criminal LMRDA violation, predominantly union funds embezzlement,
was counted as an indicator of fraud. OLMS will seek to reduce the percentage
of unions with fraud to 7.5 percent in FY 2005. Strategies to achieve the
goal are union outreach, a visible audit presence, and a strong criminal
enforcement program.
Union Transparency
Union reports meeting standards of acceptability increased
to 92 percent. This resulted from agency compliance assistance efforts and
increasing use of electronic reporting formats, which include error checks
and report validation to assist filers in preparing complete and accurate
reports. Increased union transparency is critical to promoting union democracy
and financial integrity. In FY 2005, OLMS will increase compliance rates
to 95 percent by continuing outreach and compliance assistance efforts, and
increasing use of electronic forms.
Management Issues
Performance data comes from two systems. The Case Data
System includes comprehensive information about OLMS investigations, audit
findings, and subsequent enforcement actions. The labor organization report
system (e.LORS) includes timeliness and LMRDA union report sufficiency information.
Maintaining effective union outreach and a visible audit presence will be
essential to increasing union financial integrity. Timely, accurate union
financial reports are essential to promoting union democracy and financial
integrity. Completeness and accuracy of union reports are markedly increasing
as a result of compliance assistance efforts and increasing use of the electronic
union annual reporting. Timely public disclosure reporting remains a continuing
challenge in spite of OLMS' comprehensive program efforts to correct
a persistent delinquent report problem. To address this challenge, DOL supports
amendment of the LMRDA to authorize civil monetary penalties for late filing.
Protecting the benefits earned and promised to U.S. workers is a central
feature of DOL's secure workforce strategic goal. DOL helps increase
the economic security of America's working families by temporary protecting
wages for the unemployed; protecting private employee pension plans, health
plans and other benefits plans against fraud and abuse; protecting Federal
and certain other workers from the economic effects of work-related injuries
and illness; and protecting against lost or interrupted pension payments
of workers whose companies terminate their defined benefit plan. Three
DOL agencies and one government corporation chaired by the Secretary of
Labor create a more secure U.S. workforce by protecting worker benefits the
Employment and Training Administration (ETA), the Employee Benefits Security
Administration (EBSA), the Employment Standards Administration (ESA), and
the Pension Benefit Guaranty Corporation (PBGC).
ETA temporarily replaces the wages of the unemployed through the Unemployment
Insurance (UI) program, which provides grants to State-operated programs
and manages the Unemployment Trust Fund. ETA ensures that States' programs
are administered efficiently according to Federal standards and requirements,
and manages the trust fund to provide a buffer to volatile cycles in tax
revenues and benefit claims. EBSA protects private employee pension plans,
health plans and other benefits plans against fraud and abuse by enforcing
Title I of the Employee Retirement Income Security Act of 1974, as amended
(ERISA); through compliance assistance, and through education. Where there
has been malfeasance, EBSA restores benefits and assets by bringing civil
and criminal cases.
ESA protects Federal and certain other workers from the economic effects
of work-related injuries and illness's through the Office of Workers' Compensation
Programs' (OWCP) four disability compensation programs. OWCP provides
wage replacement and cash benefits, medical treatment, vocational rehabilitation,
and other benefits to covered workers, their dependents and survivors. PBGC
protects the pension benefits of participants in defined benefit plans that
have been terminated, usually due to the sponsoring employer's bankruptcy,
by serving as both insurer and administrator. As an insurer, PBGC collects
insurance premiums from employers that sponsor insured pension plans. As
an administrator, PBGC pays monthly retirement benefits to the participants
in terminated plans.
Goal (Agency) Period
Goal Statement [Achievement]
|
Performance Summary |
2.2A (ETA) FY 2004
Make timely and accurate benefit payments to unemployed workers, facilitate
the reemployment of Unemployment Insurance claimants, and set up Unemployment
tax accounts promptly for new employers.
[Not Achieved]
|
ETA reached targets for recovery of estimated overpayments, facilitating reemployment
and establishing tax accounts. ETA failed to reach its target payment
timeliness for first payments. |
2.2B (EBSA) FY 2004
Enhance pension and health benefit security.
[Achieved]
|
EBSA reached all targets, including those for successful conduct of civil and
criminal cases against benefit plan malfeasance, and customer satisfaction
with participant assistance received. |
2.2C (ESA) FY 2004
Minimize the human, social, and financial impact of work-related injuries
for workers and their families.
[Substantially Achieved]
|
ESA reached nine of ten targets. Lost production days fell for USPS employees,
but not for all other agencies. ESA also kept Federal Employee Compensation
Act medical costs inflation below the national healthcare inflation
rate. |
2.2D (PBGC) FY 2004
PBGC will improve customer satisfaction according to the American
Customer Satisfaction Index (ACSI).
[Not Achieved]
|
PBGC reached its target for customer satisfaction of participants in trusteed
plans, but not for sponsors of covered pension plans. |
The Oregon Employment Department is making life easier for its unemployment
insurance customers through its new debit card option. The ReliaCard Visa
functions like a debit card and allows recipients a new level of security
in obtaining their benefits by avoiding the possibility of stolen, lost,
or destroyed checks another initiative to guard the Unemployment
Insurance program against fraud. This new option has benefited both the state
and unemployment insurance recipients. Oregon has saved a considerable amount
of money on the printing, mailing, and processing costs associated with payment
by paper checks. In addition, customers benefit from faster, easier access
to benefits. One happy customer noted, "I have done my banking at U.S.
Bank for many years, and when the Oregon Employment Department offered the
opportunity to receive my benefits by debit card, I jumped at the chance.
It is very convenient." |
|
Photo credit: Craig Spivey |
Net Cost of Programs
FY 2004 program costs of $46.7 billion supported ETA's
unemployment insurance and foreign labor certification programs, EBSA efforts
to ensure that individuals receive promised benefits, and ESA programs to
reduce the consequences of work-related injuries. PBGC is not included in
the Consolidated Statement of Net Costs, hence the costs of its programs
are not reflected here.
FY 2004 program costs decreased by approximately $11 billion, or 20%, from
FY 2003. Unemployment Insurance program costs account for the entire decrease
in costs and account for 93 percent of FY 2004 expenditures for this outcome
goal. UI Program costs are largely driven by average weekly insured unemployment
(AWIU) the average number of people filing claims for continuing
UI benefits each week. The AWIU figure decreased from 3.646 million in FY
2003 to an estimated 3.167 million in FY 2004. UI benefits paid decreased
from $54.0 billion in FY 2003 to an estimated $42.1 billion in FY 2004.
The considerable decreased costs for Outcome Goal 2.2 were minimally offset
by increased costs to ESA's Black Lung program. In FY 2004, the Special
Benefits for Disabled Coal Miners was transferred to ESA from the Social
Security Administration. The amount apportioned for this account in FY 2004
is $403 million.
Results Summary
ETA did not meet its UI performance goal, which saw its intrastate
first payment timeliness (within three weeks) fall from 88.9% to a projected
88.7%. However, ETA did improve payment accuracy, facilitation of reemployment,
and quick determination of UI claimants' tax liability. Of particular
importance is the improved detection of overpayments, which is crucial to
the integrity of UI administration. ESA substantially achieved its goal for
Office of Workforce Compensation Programs' four disability compensation
programs. ESA successfully placed 62 injured USPS employees who were vocational
rehabilitation program participants with new employers and produced $23.4
million in savings by carefully reviewing cases for continued disability
status, and reemployment potential. The savings resulted from benefit adjustment
and roll reduction. ESA also become more efficient in resolving disputed
Longshore and Harbor Workers' program cases and in processing Initial
claims of the Energy Employees Occupational Illness Compensation claims.
Meeting its performance goal, EBSA saw its ratios for successful civil and
criminal cases improve. Success in the case ratio indicators demonstrates
EBSA's improved selection and conduct of investigations. A successful
closed civil investigation is one in which rightful assets are protected
or returned to plans and participants. A successful criminal investigation
is one that is referred for prosecution. While PBGC managed to improve
its customer service score for participants in trusteed plans, it did
not reach its target for improving customer service to plan sponsors.
Future Challenges
Many of the challenges the Department faces in protecting
worker benefits are associated with the dynamic nature of the 21st Century
workforce. UI program administration must maintain its integrity by preventing
tax avoidance and reducing overpayments. In FY 2005, ETA will focus on reducing
UI tax avoidance and benefit overpayments, and EBSA will make programmatic
adjustments to achieve the right mix of targeted enforcement, compliance
assistance, and education in protecting nearly 7,000,000 employee pension,
health, and other benefit plans.
Other challenges for DOL's workforce compensation programs include
increasing medical costs and a large expected influx of claimants. As general
medical costs continue to rise in line with expanding medical technologies,
the compensation programs' medical costs will also rise. DOL strives
to ensure that the inflation rate for these medical costs increases more
slowly than the comparable national healthcare rate. The number of Defense
Base Act Longshore claims from injured civilian contractors in Iraq and Afghanistan
is increasing, and could increase dramatically should the potentially large
pool of Iraqi civilians employed by American contractors begin to file claims.
PBGC continues to face an unprecedented influx of terminated plans. Meanwhile,
participants' and practitioners' expectations for speed and accuracy
of services continue to rise, specifically in the demand for electronic transactions
and information. PBGC will identify opportunities to improve customer service
in the face of an increased customer base that demands improved speed, accuracy,
and information.
Make timely and accurate benefit payments to unemployed workers, facilitate
the reemployment of Unemployment Insurance (UI) claimants, and set up unemployment
tax accounts promptly for new employers.
Indicators
Payment Timeliness: 89.2% of all intrastate first payments will
be made within 14/21 days;
Payment Accuracy: Establish for recovery at least 59% of the amount of estimated
overpayments that the States detect;
Facilitate Reemployment: A method for establishing an entered-employment
rate for UI claimants was pilot tested in FY 2003, and a baseline will be
established using pilot data; and
Establish Tax Accounts Promptly: 82.2% of determinations about Unemployment
Insurance tax liability of new employers will be made within 90 days of the
end of the first quarter they become liable for the tax.
Program Perspective
By temporarily replacing part of lost wages, the Federal-State
Unemployment Insurance (UI) system ameliorates personal financial hardship
due to unemployment and stabilizes the economy during economic downturns.
For both workers and employers, the program's success depends upon: timely payment of benefits;
prevention or prompt detection of erroneous payments; timely establishment
of new employers' tax accounts to ensure the reporting of workers' wages
and payment of taxes to fund benefits; and promoting and facilitating workers' return
to suitable work. States operate their own programs under their own laws.
As the Federal partner, DOL provides program leadership, allocates administrative
funds, provides technical assistance, and exercises performance oversight
to help ensure that the system efficiently provides the greatest security
to workers and that States meet requirements of federal UI laws and regulations.
Economic conditions and the resulting program workloads affect many aspects
of UI performance. For example, when unemployment rises, more claims are
filed, and UI payment timeliness generally declines. On the other hand, slower
new business creation reduces the number of new employer tax accounts, and
the timeliness of tax liability determinations generally goes up. Higher
levels of claims and payments tend to increase the number/dollar amount of
overpayments often temporarily outpacing detection and recovery efforts.
Results, Analysis and Future Plans
The goal was not achieved, but three of
the four targets were reached:
- Payment Timeliness: 88.7 percent of first
payments were made within three weeks, just short of the target of 89.2
percent.
- Payment Accuracy: States established for recovery 61 percent
of the estimated amount of overpayments they could detect and recover.
- Facilitate Reemployment: After completion of a successful 6-state
pilot and establishment of a baseline of 51.5 percent based on pilot
results, DOL began to seek Office of Management and Budget (OMB) approval
to collect data from all states on re-employment of UI claimants. States' reporting
would begin no earlier than the first quarter of FY 2006.
- Establish
Tax Accounts Promptly: 83 percent of determinations establishing employers
as newly liable for filing UI reports and paying UI taxes were made
within 90 days of the end of the quarter they became liable.
The UI system performed extremely well in the face of high claims workloads.
The number of beneficiaries, 8.7 million, was lower than in FY 2003 (10.3
million), but one million of them received over $4 billion in extended benefits mostly
Temporary Extended Unemployment Compensation as well as regular benefits.
Benefit payments totaled $40.8 billion, down from $53.3 billion in FY 2003.
States maintained first payment and new employer status determinations timeliness
at a high level and improved detection of overpayments.
ETA continues to emphasize payment integrity. In March, 2004, ETA signed
a memorandum of understanding with the Social Security Administration (SSA)
to allow State Workforce Agencies (SWAs) and SSA to exchange data in real
time. SWAs that have met the system security requirements and have established
a data-sharing agreement will have access to SSA data to verify personal
information, such as name, social security number, and date of birth for
those applying for unemployment benefits. In August, the President signed
a law giving States access to the National Directory of New Hires, an additional
tool for swiftly detecting and preventing payments to claimants who have
returned to work. For FY 2005, targets for all indicators will be raised.
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Management Issues
DOL is seeking authorization to collect data for the Facilitate
Reemployment indicator for reporting in FY 2006. Because of established reporting
schedules, 4th quarter data for the Payment Accuracy and Establish Tax Accounts
Promptly indicators were not available in time for publication in this report.
The results reported are projections of fiscal year performance using regression
models that incorporate the latest available performance data and reflect
OMB's mid-FY 2004 economic assumptions.
In its FY 2004 report listing DOL's top management challenges, the
Office of Inspector General (OIG) listed identity theft, UI overpayments,
and State UI trust fund solvency. OIG recommended that ETA enhance investigative
training for State UI personnel to focus on fraud prevention and detection.
ETA provided funding to States to: (1) implement data exchanges with the
Social Security Administration for the purpose of matching Social Security
Numbers to identify false numbers; and (2) access data from other States
to verify identities. ETA also provided States with a written alert suggesting
action that States could take to combat identity theft problems.
A recent OIG study found that the new hire detection method is better for
establishing UI overpayments than the wage/UI benefit cross-match (Study
6 in Appendix 2). In response to OIG's recommendation, ETA provided
funds and encouraged States to access their new hire directories and other
State databases. In August 2004, the President signed into law a bill giving
States access to the National Directory of New Hires, thereby removing a
critical barrier to improved overpayment detection. ETA is pilot testing
cross-matching of its Benefit Accuracy Measurement (BAM) investigation case
database against State wage records to more completely detect overpayments.
If this process proves cost-effective, it will be incorporated into the BAM
methodology.
OIG remains concerned that States' trust funds may not have adequate
reserves to meet projected UI compensation demands. ETA has developed and
regularly publishes various measures of State solvency to help inform and
guide State decisions on tax rates. In the short term, the system loans funds
to States that have encountered serious cash flow problems, thus enhancing
UI's impact as an automatic economic stabilizer.
DOL also commissioned a study, Internet Initial Claims
Evaluation (Study
22 in Appendix 2) that evaluated service delivery; security; fraud and abuse
controls; and cost effectiveness, and concluded that Internet initial claims
filing is a convenient and cost-effective method of claims taking, and that
there is no evidence that this method leads to increased erroneous payments
or system security breaches. In its 2003 Program Assessment Rating Tool (PART)
review, the Administration concluded that the UI program is effectively managed.
Among recommendations was completion of efforts to reduce the overpayment
rate. As noted above, the Department has made significant progress in this
area.
Enhance Pension and Health Benefit
Security
Indicator
Enforcement
Achieve greater than a 50% ratio of closed civil cases with corrected
violations to civil closed cases;
Achieve greater than a 25% ratio of criminal cases referred for prosecution
to total criminal cases; and
Participant Assistance
Achieve a Customer Satisfaction Index of 61, or comparable
measurement, for participants and beneficiaries who have contacted EBSA for
assistance.
Program Perspective
EBSA is responsible for enforcing the Employee Retirement
Income Security Act (ERISA), and the main challenge is to maintain trust
and confidence in the employee benefits system. By achieving successful civil
and criminal case closure and referral rates, DOL shows its success in targeting
wrongdoers. DOL also combines an aggressive outreach and education program
with a highly motivated and trained staff of customer assistance experts
in the field of pension and health laws. By directly assisting plan participants
and beneficiaries in understanding their rights and protecting their benefits,
we help workers monitor their own benefit rights.
EBSA has steadily improved its performance in the respective areas improving
from a civil ratio of 46 percent in FY 1999 to 69 percent in FY 2004, a criminal
ratio of 26 percent in FY 2001 to a 45 percent in FY 2004 and a customer
satisfaction baseline of 53 in FY 2001 to a satisfaction score of 62 in FY
2004.
EBSA oversees benefit security for nearly seven million plans, 150 million
participants and beneficiaries, and in excess of $4 trillion in assets. Externalities,
such as the economy and tax policy, have a significant impact on whether
employers opt to offer benefits, and whether employees choose to participate
and to what extent.
After receiving a telephone call from a worker alleging that a Connecticut
employer had failed to credit him with years of service toward his pension,
DOL investigated the participant's retirement plan and determined that
the participant's complaint was valid and that other workers were improperly
excluded from the plan for an assortment of invalid reasons. As a result
of this intervention, the company agreed to increase the pensions of 101
employees by more than $63,000. |
Results, Analysis, Future Plans
The goal was achieved. The Department achieved
a civil ratio of 69 percent and a criminal ratio of 45 percent while receiving
a customer satisfaction score of 62 percent from the Gallup Organization.
DOL obtained monetary results of over $3.1 billion as a result of its investigative
and participant assistance activities; a record
year. While monetary results can fluctuate significantly from year to
year, monetary results have followed an upward trend
over the past several years. DOL investigated a number of high profile, resource
intensive cases with far reaching effects on the participant benefits
community. Benefit Advisors responded
to over 99 percent of all written inquiries within 30 days of receipt
and responded to over 99 percent of telephone inquiries by the close of
the next business day.
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In addition to long-term targets for our civil
and criminal ratios, we have added annual targets to reflect our success
with respect to national enforcement initiatives, consistent with national
priorities, which may change from year-to-year, taking into account
new enforcement problems. EBSA has worked with Gallup to refine the long-term
target consistent with other industry standards and experience. EBSA also
added a internal compliance assistance measure that will demonstrate success
in voluntary compliance programs such as the Voluntary Fiduciary Correction
Program and our Delinquent Filer Voluntary Correction Program. EBSA has also
developed an efficiency measure that will provide, as a ratio, costs per
enforcement result.
A plan participant needed a lung transplant and filed a pre-service claim
to determine if the transplant would be approved. If approved, he would be
first on the transplant list. Without the approval, his prognosis was not
good. After being told that it might take several weeks to receive a response,
the participant contacted DOL. We explained to the employer that the law
requires a response within 72 hours for urgent or emergency requests. The
employer quickly reviewed the claim and determined that the transplant procedure
was covered. As a result, the participant was placed at the top of the waiting
list. |
Management Issues
EBSA's Enforcement Management System (EMS) provides the data used
to measure the enforcement ratios. EMS and EBSA continually receive high
marks from the Office of Inspector General for data integrity and quality.
EBSA's quality assurance processes require that individuals not directly
involved with the investigation at hand approve all case openings. Cases
with monetary results receive several levels of scrutiny including national
office oversight and review. Additionally, EBSA uses a peer review method
to conduct quality assurance reviews on randomly selected closed cases.
In the participant assistance area, The Gallup Organization performed the
customer satisfaction evaluation and provided the customer satisfaction score.
EBSA has acted on recommendations from its PART assessments in FY 2004 and
FY 2005 by establishing proactive evaluation initiatives and a regulatory
review program. Specifically, EBSA is conducting a follow-up of its FY 1995
audit quality study to determine the level of compliance of pension plan
audits to professional accounting standards. In FY 2005, EBSA expects results
from the investigative portion of a baseline compliance study being conducted
to measure ERISA compliance in contributory pension plans, focusing on the
timeliness and remittance of employee contributions.
In FY 2004, OIG completed audits of EBSA's participant and compliance
assistance program and of the process used by EBSA to identify and correct
substandard audits of employee benefit plans (Studies 2 and 3 in Appendix
2). Also, EBSA concluded program evaluations of its participant assistance
and enforcement programs with the assistance of The Gallup Organization and
Mathematica Policy Research, respectively (Studies 16 and 17 in Appendix
2). In FY 2005 Gallup will perform a follow-up study of EBSA's participant
assistance program.
EBSA is establishing a regulatory review program that will: (a) set forth
a process for identifying initiatives for review, (b) provide for cost and
benefit evaluation of identified regulations and exemptions and, (c) explore
modifying or eliminating those rules for which costs and administrative burdens
outweigh benefits. EBSA and DOL's Assistant Secretary for Policy are
developing a Departmental Federal Register notice to seek public input on
which pension and benefit regulations should be reviewed.
Minimize the human, social, and
financial impact of work-related injuries for workers and their families.
Indicators
For Federal Employees' Compensation Act (FECA) cases of
the United States Postal Service, reduce the lost production days rate (LPD
per 100 employees) by 1% from the FY 2003 baseline;
For FECA cases of All Other Governmental Agencies, reduce the lost production
days rate (LPD per 100 employees) by 1% from the FY 2003 baseline;
Increase FECA Vocational Rehabilitation placements with new employers for
injured USPS employees by 15% over FY 2002;
Through use of Periodic Roll Management, produce $38 million in cumulative
(FY 2003-FY 2004) first-year savings in the FECA program;
The trend in the indexed cost per case of FECA cases receiving medical treatment
will remain below the comparable measure for nationwide health care costs;
Meet 60% of the annual targets for five communications performance areas;
Reduce by 4% over the FY 2002 established baseline the average time required
to resolve disputed issues in Longshore and Harbor Worker's Compensation
Program contested cases;
Increase by 8% over the FY 2001 established baseline the percentage of Black
Lung benefit claims filed under the revised regulations for which, following
an eligibility decision by the district director, there are no requests for
further action from any party pending one year after receipt of the claim;
77% of Initial Claims for benefits in the Energy Program; and
77% of Final Decisions in the Energy Program are processed within standard
timeframes
Program Perspective
ESA protects Federal and certain other workers from the
economic effects of work-related injuries and illness's through OWCP's
four disability compensation programs. OWCP accomplishes this by providing
wage replacement and cash benefits, medical treatment, vocational rehabilitation,
and other benefits to covered workers, their dependents and survivors. These
programs are:
- Federal Employees' Compensation for civilian Federal workers;
- Longshore
and Harbor Workers' Compensation for private-sector maritime
workers;
- Black Lung Benefits program for coal miners;
- Energy Employees Occupational
Illness Compensation for nuclear weapons employees of the Department
of Energy or its contractors.
Results, Analysis and Future Plans
The performance goal was substantially
achieved. Discussion of results at the performance indicator level is organized
into three categories: Returning Injured Federal Employees to Work, Reducing
Program Expenses and Customer Service.
Returning Injured Federal Employees to Work
OWCP continued to reduce average
time loss in cases receiving FECA benefits through its early intervention
strategy, Quality Case Management and active partnerships with postal and
other government employers. Despite this, LPD rates continued to rise.16
The USPS LPD rate rose to 148 days against a target of 146 days. Declining
employment and greater challenges on reemploying injured USPS workers remain
factors in this result. The target for the non-postal agencies also was not
reached, as LPD increased by 12 percent to 63, compared to the target of
55 days. The Department of Homeland Security accounted for 90 percent of
this increase.
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The majority of injured workers who return to
work do so with their previous employers,
but that has been made more difficult with declining
employment levels at USPS. So, beginning in FY 2003, OWCP began
emphasizing placement of injured postal workers with new employers.
In FY 2004 OWCP reached the target for placing USPS employees who
participate in the vocational rehabilitation program into new jobs, placing
62 USPS workers compared to a target of 56. The emphasis on assistance
to Postal Service employees will continue in FY 2005.
Reducing Program Expenses
The use of Periodic Roll Management (PRM) to generate
savings target was also reached. PRM includes careful review of cases to
determine if continued disability status is warranted, and to determine the
reemployment potential of those current receiving compensation. DOL
saved $49 million over the two-year
period (FY 2003 2004) compared
to a target of $38 million. FY 2004 savings from PRM were $24.4 million
compared to a target of $18 million. In FY 2005, DOL has set a target of achieving
an $additional $17 million in PRM savings.
DOL also reached its target of keeping the inflation of Federal Employees' Compensation
Act (FECA) medical costs below the Nation's rate of healthcare inflation
(according to the Milliman USA Health Cost Index, which is updated quarterly).
FECA experienced a medical cost inflation of 2.4 percent, while the Milliman
Index predicts a national rate of healthcare inflation of 8.8 percent. Responding
to recent medical care cost increases, in August 2003 FECA converted medical
bill processing from district offices to a centralized operation under contract
to Lockheed Martin. More stringent bill reviews under this system are expected
to further reduce average FECA medical costs.
16In FY 2004, OWCP changed the way it measures LPD, and thereby changed its
FY 2003 baseline data for the USPS and all other government agencies' lost
production days rate measures. LPD's are now measured in real-time rather
than with accumulated data, as they were in the past. Please see Appendix
1 for the changes to the baseline data.
Customer Service
OWCP reached four of the five sub-targets to improve communications
with benefit recipients, including increased use of electronic services, reducing
average caller wait times, increasing response timeliness and resolving more
inquiries without call-back. OWCP did not reach the communications sub-target
for handling calls according to program quality standards. OWCP also reached
its target to reduce the time required to resolve disputed issues in Longshore
and Harbor Workers' Program contested cases. Disputed issues were resolved,
on average, in 247 days. The target was 273 days. Further, OWCP reached its
target to reduce requests for further action following Black Lung benefit eligibility
decisions (for claims subject to revised regulations). Performance for this
indicator was 82.2 percent, against a target 74.5 percent. DOL also reached
its Energy program targets for initial claims processing and for reaching a
final decision. This program processed 92 percent of initial claims and 99
percent of final decisions within standard time frames, against targets of
77 percent for both indicators.
For FY 2005, OWCP will have a more ambitious target for communications with
customers: reaching four of the five sub-targets. Strategies are in place to
improve communications with customers through greater Internet access for claims
purposes. The indicator for timely Longshore and Harbor Worker's dispute
resolution is intended to measure OWCP's success in serving as mediator
injured workers and their employers. To continue the positive trend in this
indicator, OWCP will provide claims staff with further training to improve
mediation skills.
The revised regulations for Black Lung benefit claims did not change eligibility
requirements, but were designed to produce faster and fairer final benefit
determinations. The result has been an increase in the number of stakeholders
who accept the district director's initial decision and decide not to
pursue the claim further. The Energy Program's success in efficient initial
claims processing and final decisions results from attention to customer communications,
accurate claims processing, and automated data processing. We are committed
to improving the employment verification process by obtaining access to former
worker program records, sharing more data for dual claims and enhancing working
relationships with DOE facility contacts. Based on performance that far exceeded
targets, the Energy Program has set more ambitious targets of seven percent
increases for both indicators in FY 2005.
Management Issues
Performance data used for OWCP's indicators are extracted
from the four benefit programs' automated case management systems, benefit
payment systems, internal managerial audits or other reviews. OWCP maintains
strict management oversight of data entry, including regular on-site review
by district directors to ensure accuracy, and periodic reviews that sample
and assess data quality and accuracy.
A FY 2003 Office of Inspector General financial audit found ineffective medical
evidence controls (Study 4 in Appendix 2). To remedy this, in December 2004
DOL will begin using an automated tracking mechanism that will alert claims
staff when medical evaluations are due. ICF Consulting recently completed a
broad review of the FECA program's effectiveness (Study 18 in Appendix
2). OWCP is currently reviewing its recommendations. Provisions which create
disincentives for returning to work as opposed to remaining on full disability
are built into the Federal Employees' Compensation Act, which has not
been significantly amended in 30 years. DOL has developed a legislative proposal
which would reform these provisions.
The number of Defense Base Act Longshore claims from injured civilian contractors
in Iraq and Afghanistan is increasing, and this trend is projected to continue.
There is also a potentially very large pool of Iraqi civilians employed by
American contractors who may not be reporting injuries or may not be aware
they are entitled to coverage. Should this group begin to file claims, Longshore
cases could increase dramatically.
PBGC will improve customer
satisfaction according to the American Customer Satisfaction Index (ACSI).
Indicators
Achieve an ACSI of 71 for sponsors of covered pension plans who
have contacted PBGC for assistance
Achieve an ACSI of 77 for participants in trusteed plans who have contacted
PBGC for assistance
Program Perspective
The Secretary of Labor chairs the Pension Benefit Guaranty
Corporation's
Board of Directors, and PBGC provides timely and uninterrupted payment of pension
benefits to participants whose defined benefit pension plans were terminated.
Plan termination most frequently results from the sponsoring employer's
bankruptcy. For participants in plans for which PBGC has become the trustee,
benefit determinations tell them what pension benefits they will receive. PBGC
pays estimated benefits to all eligible participants retiring prior to the
issuance of a benefit determination, thus ensuring that retirees receive their
benefits when due and without interruption.
Results, Analysis and Future Plans
PBGC did not achieve this goal. The overall
rating for practitioners remained at 69 only
slightly lower than the national ACSI of 71 for the Federal government as a
whole, and higher than other agencies with similar financial collection responsibilities.
Although practitioners are generally satisfied with many aspects of the
service they receive, PBGC has identified several opportunities for improvement:
improve written communication and handling of calls; and simplify the
premium payment form and promote use of e-filing. Some of these efforts are
underway and others will get started in 2005. PBGC achieved
an ACSI score of 78 Score for participants in trusteed plans, exceeding the
target of 77. This is one point higher than the 2003 score of 77 and seven
points higher than the current national ACSI of
71 for the Federal government.
Overall, the scores for components that PBGC has tracked in the past three
years are all performing very well. By using the ACSI, PBGC can identify the
service elements that have a greater impact on customer satisfaction. For example,
there is a direct correlation between satisfaction and customer complaints,
meaning that as satisfaction increases, the rate of complaints would likely
decrease. PBGC experienced a significant decrease in complaints in 2004 over
the previous two years through improved responsiveness to customers.
Management Issues
For both indicators, data is collected by the Federal Consulting
Group, a franchise of the U.S. Department of Treasury. The Federal Consulting
Group uses the American Customer Satisfaction Index (ACSI) to determine the
satisfaction of PBGC plan sponsors and participants. Developed by the University
of Michigan, the ACSI is a national measure for customer satisfaction, and
is recognized as a credible and valid independent, third party measure. As
mentioned above, PBGC continues to face an unprecedented influx of terminated
plans. Meanwhile, participants' and practitioners' expectations
for speed and accuracy of services continue to rise, specifically in the demand
for electronic transactions and information.
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