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DOCUMENT RESUME 

CE 050 443 

The Fair Labor Standards Act. Enforcement of Child 
Labor Provisions in Massachusetts. Report to the 
Chairman, Committee on Labor and Human Resources, 
U.S. Senate. 

General Accounting Office, Washington, D.C. Div. of 

Human Resources. 

GAO/HRD-88-54 

Apr 88 

24p. 

U.S. General Accounting Office, P.O. Box 6015, 
Gaithersburg, MD 20877 (First five copies — free; 
additional copies — $2.00 each; 100 or mere — 25% 
discount) . 

Reports - Evaluative/Feasibility (142) 
MFOl/PCOl Plus Postage. 

*Child Labor; ^Compliance (Legal); Employment 
Practices; Employment Problems; ^Federal Legislation; 
*Labor Legislation; *Law Enforcement; Occupational 
Safety and Health 

*Fair Labor Standards Act; ^Massachusetts 



During 1987, investigations of 113 cases of alleged 
or suspected child labor violations at Massachusetts business 
establishments were conducted. Thirteen (38 percent) of these were 
randomly selected for review. Compliance officers in the Department 
of Labor *s Wage and Hour Division substantiated chil labor 
violations in 9 of the 13 cases. A total of 846 minors were found 
working longer hours or outside the time frames allowed under the 
Fair Labor Standards Act. Thirty-three minors were operating 
hazardous machinery, and two were under the minimum employment age of 
14. Nine of the 13 cases reviewed were initiated as a result of a 
complaint; in six cases, the Department of Labor began its 
investigation within 1 month. However, response time in the other 3 
complaints r«nged from 4 to 16 months. The remaining four cases were 
directed investigations that were initiated by the Department of 
Labor rather than by complaint. Civil monetary penalties totaling 
$519,833 were assessed in nine of the cases. This was reduced to 
$206,730 through negotiations with employers in three of the cases, 
with employers paying the original amount in the other six cases. 
Injuries occurred to illegally employed minors in one of the five 
cases in which minors were found working in prohibited occupations. 
Twelve injuries were sustained by 11 employees, all of whom were 
operating meat-slicing devices. (MN) 



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* Reproduction3 supplied by EDRS are the best that can be made * 

* from the original document. * 

******************************************************* ****** ********* 



ERLC 



ED 296 149 
TITLE 

INSTITUTION 

REPORT NO 
PUB DATE 
MOTE 

AVAILABLE FROM 

PUB TYPE 

EDRS PRICE 
DESCRIPTORS 

IDENTIFIERS 
ABSTRACT 



Putted Stmtfs* General Accooattng Office 



Report to the Chaiman, Committee on 
Labor and Human Reiources, U.S. Senate 



THE FAIR LABOR 
STANDARDS ACT 

Ekif orcement of Child 
Labor Provisions in 
Massachusetts 



^ Th,^ dorument has beon reoroduced 
received from tht^ person or ornamjalton 

□ Minor chanoes have bepn made to improv<» 
reprcduction qualify 





• Points of ewot opinions stated in thisdocu 
m«nt do not nfressar.iy represent official 
OcHt position or po'iry 



GAO 



United States 

General Accounting Office 

Washington, D.C. 20548 



Human Resources Division 

B-201792 
April 28, 1S88 

The Honorable Edward M. Kennedy 
Chairman, Committee on Labor 

and Human Resources 
United States Senate 

Dear Mr. Chairman: 

This report is in response to your request, and later discussions with 
your office, to provide information on the Department of Labor's 
enforcement of the Fair Labor Standards Act (flsa) child labor provi- 
sions in Massachusetts. You had expressed concern over the significant 
increase in violations of the provisions in recent years nationwide and in 
Massachusetts. 



Background 



FLSA, which is administered by Labor's Wage aiid Hour Division (whd), 
sets standards for minimum wage and overtime pay and contains provi- 
sions regulating the employment of child labor in agricultural and non- 
agricultural occupations. Under flsa, employers must pay employees in 
accordance with the statutory minimum wage and overtime provisions. 

1 he act also establishes certain standards that employers must meet 
when employing minors in agricultural and nonagricultural occupations. 
The nonagricultural standards establish the (1) minimum employment 
age (generally age 14); (2) hour and time restrictions under which 
employees under age 16 may work (for example, no more than 3 hours 
and no later than 7 p.m. on a school day); and (3) occupations persons 
under 18 may not work in (generally those involving hazardous work or 
equipment). 

Nationwide, who's records show that the number of minors identified as 
employed in violation of flsa rose from 8,999 in fiscal year 1983 to 
19,077 in 1987, an increase of about 112 percent. In Massachusetts, 
reported violations increased about 614 percent, froni 510 in 1983 to 
3,639 in 1987. 



Objectives, Scope, and 
Methodology 



For our review, we agreed to provide information on Labor's enforce- 
ment of FLSA child labor provisions in Massachusetts. 



ERIC 



Pagel 



GAO/H]U>SSM Enforcement of ChUd Labor Piovtslont 

3 



B-201792 



Specifically, we reviewed 

• the nature and type of child labor violations identified by whd; 

• whether whd resolved child labor complaints thnjugh investigation as 
required, rather than by conciliation;' 

• who's timeliness in responding to and investigating child labor 
complaints; 

• civil money penalties assessed by whd and paid by employers found in 
violation of child labor provisions; and 

• the number and severity of iivjuries sustained by minors found working 
in occupations deemed hazardous by Labor under flsa. 

We also agreed to obtain information on Labor's efforts to increase 
employers' awareness of child labor provisions. 

Our review was done from July of 1987 to December 1988, primarily at 
Labor's Boston Regional Office and the two whd area offices responsible 
for Massachusetts cases, located in Boston, Massacnusetts, and Provi- 
dence, Rhode Island. We reviewed documentation and interviewed offi- 
cials in each of these offices. During the 9-month period ending June 30, 
1987, whd conducted investigations of alleged or suspected child labor 
violations at 1 13 Massachusetts business establishments. We randomly 
selected for review a sample of 13 child labor cases, which involved 
investigations at 43 business establishments.^ Our sample covered 38 
percent of the 1 13 investigations whd conducted. Wc reviewed whd's 
compliance efforts from response time in handling complaints to penalty 
assessments when employers were found to be violating the law. Where 
necessary, we supplemented infomation obtained from the case files by 
interviewing the responsible area office officials. 



R6SUltS in Bri6f review of the 13 cases disclosed the following: 



whd compliance ofHcers substantiated child labor violations in 9 of the 
13 cases. A total of 846 minors were found working longer hours or 
outside the time frames allowed under flsa. whd also found that 33 



^Conciliations are typically initiated as a result of a complaint, involve only one employee, and ^ener- 
ally take only a few hours to complete. Investigations may be complaint-initiated or directed by WHD. 
They are more detailed, take an average of 20 hours to complete, and are made at the empkyyers* 
establishments, where records are rwiewed, emptoyees are interviewed, and back wages and penal- 
ties due are computed. 

^The 13 cases included 7 with one establishment and 6 with more than one esubltshment. 



Q Page 2 d GA0/HKI>«8MEiifomiMtorCidldu^ 



ERIC 



B-201792 



minors were operating hazardous machinery, and minors were under 
the minimum employment age of 14 allowed by flsa. 

• In accordance with its policy for child laoor compliance actions, whd 
investigated all 13 cases, including on-site visits to each establishment 
for review of employer records and interviews with employees. Accord- 
ing to a report on whd compliance actions in Massachusetts during the 
first 9 months of fiscal year 1987, all of the 1 13 child labor compliance 
actions were recorded as investigations. 

• Nine of the 13 cases we reviewed were initiated as a result of a com- 
plaint and, in 6 of them. Labor began its investigation within 1 month. 
However, response time in the other 3 complair ts ranged from 4 to 16 
months, due, in part, to staffmg problems and the low priority given the 
cases. The remaining 4 cases were directed investigations, initiated by 
Labor and not as a result of complaints. 

• WHD assessed civil money penalties in the 9 cases with substantiated vio- 
lations. For the 9 cases, whd assessed penalties totaling $519,830. This 
was reduced to $206,730 through negotiations with the employers. One 
case, involving a supermarket with 17 establishments in Massachusetts 
and 22 in another state, paid the largest penalty, $200,000, after being 
assessed $511 ,400 initially. In 6 cases, the employer paid the amount 
assessed. In the remaining 3 cases, the employer negotiated a reduced 
penalty with Labor. 

• WHD compliance officers' investigations disclosed ii\juries occurring to 
illegally employed minors in 1 of the 5 cases in which whd identified 
minors under age 18 working in prohibited occupations. The investiga- 
tion disclosed 12 ii\juries sustained by 1 1 employees, all of whom were 
operating meat-slicing devices. Four of the ii\juries were considered seri- 
ous, requiring stitches and at least 1 day away from work. 



whd issues an annual information release, usually in late spring, to 
remind employers of the child labor laws and periodically issues news 
releases announcing findings and settlements in major cases. The annual 
release is timed to coincide with the hiring of summer employees and is 
intended to inform employers and the public of the hour and time 
restrictions applicable to persons under age 16 and prohibited occupa- 
tions for persons under age 18. 

Labor's national office and area office officials believe that increasing 
their efforts beyond what they are currently doing to educate employers 
would not be warranted. According to tlie chief. Branch of Child Labor 
Programs in the Washington, D.C., headquarters, the significant increase 
in child labor violations identified in the Boston region is responsible for 



Efforts by WHD and 
Labor to Improve 
Compliance 



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Page a 



GA0/HIUMU4 Enforcement of Child Ubor Ptoviflkms 



B-201792 



a good portion of the increase in the national statistics, whd area office 
and Massachusetts state officials attribute the Boston region's increases 
to the favorable economic conditions and the low unemployment rate in 
Massachusetts rather than a lack of employer awareness of the child 
labor employment standards. 

WHD has no current plans to increase efforts to educate employers about 
child labor employment standards. However, the Secretary of Labor 
established a Child Labor Advisory Committee in August 1987, to pro- 
vide advice and recommendations to assist whd in effectively adminis- 
tering the child labor provisions of flsa. The committee, which had its 
initial meeting in March 1988, will evaluate the child labor law, particu- 
larly applicable employment standards, some of which have not been 
changed since promulgated in the 1940's shortly after flsa's enactment 
in 1938. 



Need to Evaluate the 
Child Labor 
Employment 
Standards 



Although the limited scope of our review precludes a formal reconunen- 
dation, we identified one policy issue — Labor's assessmait policy for 
repeated serious iiuuries sustained by minors working in prohibit;ed 
occupations — that should be considered by the Child Labor Advisory 
Committee. We brought this to the attention of Department of Labor 
officials (see pp. 22 and 23). 



As requested, we did not obtain written comments from the Department 
of Labor on this report. However, Labor officials were given an opportu- 
nity to review a draft of this report and their comments have been 
included where appropriate. Also, as arranged with your office, unless 
you publicly announce its contents earlier, we plan no further distribu- 
tion of this report until 30 days from its issue date. At that time, we will 
send copies to the Secretary of Labor and other interested parties, and 
make copies available to others on request. 

Sincerely yours. 



Janet L. Shikles 
Associate Director 



ERIC 



GA0/HSD^M4 Enforaroent of Child Ubor PiwialoM 



Contents 



Letter 



Appendix I s 

The Fair Labor Background 8 

CltanHarHc Art- Objectives, Scope, and Methodology 10 

OUUlUdl U2> -fVi^L. PLSA Child Labor Violations Have Increased Significantly 12 

EJnfof cement of Child in Massachusetts 

Labor Provisions in investigations of Potential Child Labor Violations in 13 
Ti/r ♦Vi H- Massachusetts 

MaSSa.CnUS6ttS Labor's Employer Awareness Activities Intended to 22 

Reduce Child Labor Violations 

Labor to Evaluate Child Labor Employment Standards 22 



Tables Table I.l: Minors Illegally Employed, Fiscal Years 1983-87 12 

Table 1.2: Number of Establishments Per Case Reviewed 13 

Table 1.3: WHD Findings in Nine Cases With 14 

Substantiated Child Labor Violations 

Table 1.4: Civil Money Penalties Assessed by WED and 19 

Paid by Employers 

Table 1.5: Negotiated Qvii Money Penalties 19 



Abbreviations 

FiSA Fair Labor Standards Act 
GAG General Accounting Office 
WHD Wage and Hour Division 



ERLC 



7 



GAO/IIRMM4 Enforcment of Child Ubor PkwMoiit 



Appendix I 



The Fair Labor Standards Act: Enforcement of 
Child Labor Provisions in Massachusetts 



The Department of Labor administers the Fair Labor Standards Act 
(fim), enacted in 1938 and amended several times, for workers of firms 
engaged in interstate and foreign commerce. The act sets standards for 
nwumum wage and overtime pay and requirements for record keeping. 
The act also contains child labor provisions that regulate the employ- 
ment of persons under age 18 in agricultural and nonagrlcultural occu- 
pations under oppressive conditions that knay be particularly dangerous 
or detrimental to the health and well-being of minors. Labor estimates 
that of nearly 73 million employees covered by flsa, about 2.5 million 
axe minors under age 18. 

Under flsa, employers must pay employees in accordance with the stat- 
utory minimum wage and overtime provisk)ns. The act aJso established 
certain standards and requirements — many of which were established 
shortly after the enactment of flsa in 1938— that empl(^ers must 
adhere to when employing minors in agricultural and nonagncultural 
occupations. 



The nonagriculcural standards established 



• the minimum age for employment, generally age 14; 

• hour and time restrictions under which minors may work unless 
enrolled in an approved special program. Minors under age 16 may work 
only outside school hours and no more than 3 hours on a school day, 18 
hours in a school week, 8 hours on a nonscbool day, or 40 hours in a 
nonschool week. Also, their work howrs are restricted to the period from 
7 am. to 7 p.m., except from June 1 through Labor Day, when evening 
hours are extended to 9 p.m.; and 

• prohibited occupations that are considered hazardous or detrimental to 
the health and well-being of minors under age 18. Labor has established 
17 prohibited occupations; most involve operating some type of poten- 
tially dangeroi .oachinery or exposure to dangerous substances. 

Labor's Wage and Hour Division (whd), headquartered in Washington, 
D.C., within the Emplujrment Standards Administration, is responsible 
for administering and enforcing fusa child labor provisions. whd*s Bos- 
ton Regional Office covers the New England states and, within the 
region, area offices located in Boston, Massachusetts, and Providence, 
Rhode Island are responsible for enforcement of flsa in .Massachusetts. 

WHD compliance officers undert^^e two types of compliance actions — 
conciliations and investigations: 



ERIC 



P*«e8 O GAO/HRim U JMas^rwrnstorOM Uhor rroviaioM 



Appoidlsl 

of Child Labor Provkiong in MtMacUmetU 



• Conciliations are typically initiated as a result of a complaint, involve 
only one employee, and generally take only a few hours to complete. 
When conducting a conciliation, the compliance officer does not visit the 
employer's premises or review the employer's records. 

• Investigations are more detailed than conciliations and take an average 
of 20 hours to complete. They may be initiated by whd as part of its 
annual work plan or as a result of a complaint and will include an on* 
site visit by a compliance officer who reviews employer records, inter- 
views employees, and computes back wages and penalties due, as 
appropriate. 

About 76 percent of who's flsa compliance actions are initiated as a 
result of complaints. According to the whd Boston area office assistant 
director, complaints in child labor cases often come from parents or one 
of the employing firm's customers, but rarely from the minor employee. 
Other compliance actions, called "directed investigations," are initiated 
by WHD. The whd assistant regional administ^^r in Boston told us that 
in some instances, whd identifies violations at one establishment as a 
result of a complaint and then investigates other establishments owned 
by the same company. In other instances, whd may target a particular 
type of industry for investigation and, according to whd officials, 
regardless of the reason for the investigation, a check of compliance 
with the child labor provisions is always included. 

Several remedies are available against employers who violate flsa. 
Using FLSA dvil sanctions. Labor may (1) sue employers for back wages 
due employees — including minors' — for violation of the minimum wage 
and overtime requirements and an equal amount in Liquidated damages 
on behalf of employees under section 16(c) of flsa, (2) seek an ii\junc- 
tion against future flsa violations and recovery of back wages imder 
section 17, or (3) file a combination suit under both sections. 

Labor also has the authority to assess civil money penalties under the 
child labor provisions of flsa. The act authorizes the Secretary of Labor 
to assess penalties of up to $1 ,000 for each violation of the child lator 
provisions. Employers may appeal the penalties within 15 days of the 
assessment to whd. whd refers the appeal to Labor's Chief Administra- 
tive Law Judge, who assigns it to an administrative law judge for formal 
hearing and fmal decision in the administrative process. 



Labor r^ulatkms require that minor employees be paid in accordance with the statutory minimum 
wage and overtime proviaions, regardleaa of whether the work performed was in violation of the 
child labor employment standards, unless a specific exception applies. 



Paged 



6AO/HKMM4 Enforcement of Child Labor Proviakms 



Appendix I 

The Fair Labor SUndjurds Act: Enforcement 
of Child Labor Provisions in Masaacliusetts 



Labor's Office of the Solicitor is responsible for initiating civil actions 
against employers or settling cf\ses that are not resolved by who. Crimi- 
nal actions may be brought against employers by the Department of Jus- 
tice, on the recommendation of Labor's Solicitor, for violations of the 
act, including those relate«J to child labor provisions. 



ObiectiveS Scope and Based on a request from the senate Conmuttee on Labor and Human 

^ , ^ Resources, and later discussions with the Chairman's office, we agreed 

MetnOClOlOgy to provide information on Labor's enforcement of the flsa child labor 

provisions in Massachusetts. Specifically, we reviewed 



• the nature and type of child labor violations identified by whd; 

• whether whd resolved child labor complaints through investigations, as 
required, rather than by conciliation; 

• whd's timeliness in responding to and investigating child labor 
complajints; 

• civil money penalties assessed by whd and paid by employers found in 
violation of child labor provisions; and 

• the rumber and severity of iivjuries sustained by minors found working 
in occupations deemed hazardous under fusa. 

We also agreed to obtain information on Labor's efforts to increase 
employers* awareness of the child labor provisions. 

We performed our work primarily at the Department of L^abor's regional 
office in Boston, Massachusetts, and at the two area offices responsible 
for Massachusetts cases in Bostxm and Providence, Rhode Island. We 
also analyzed various reports from whd's Washington, D.C., headquar- 
ters for fiscal years 1983 through 1987 to obtain information on child 
labor violations and compliance actions nationwide and in New England 
in particular. 

To obtai i a working knowledge of whd's flsa operating procedures, cri- 
teria, and standards for conducting compliance actions on child labor 
violations, we reviewed the Wage and Hour Division Field Operations 
Handbook and the standard forms used in documenting investigations 
and assessing penalties against onployers. The handbook contains whd's 
FLSA enforcement policies, procedures, and criteria, including investiga- 
tive priorities for chi)d labor cases and the procedures for assessing, 
negotiating, and collecting penalties. 



Q Page 1 0 GAO/HRDWM Enfominent of Child Labor Provtdom 

EMC 10 



Ai»pend(xl 

The Fair Labor Standards Act: Enforcement 
of Child Labor Provisions in Massachusetts 



For information on specific aspects of Labor's child labor enforcement 
activities in Massachusetts, we reviewed a sample of child labor compli- 
ance actions from vvkd's latest available records at the time of our work. 
We obtained a report of all flsa compliance actions closed out in the 
Boston and Providence area offices during the 9 months ending June 30, 
1987, and identified 113 investigations involving alleged or suspected 
child labor violations at Massachusetts establishments. From this uni- 
verse, we randomly selected 13 cases that covered investigations at 43 
establishments. Our sample represented 38 percent of the 1 13 child 
labor investigations, who compliance investigations may cover busi- 
nesses operating at a single or multiple locations. The 13 cases included 
7 with one establishment and 6 with more than one. 

We reviewed the area offices* investigative files on each case to assess 
the compliance officers* investigations and adherence to the Wage and 
Hour Division Field Operations Handbook 's investigation policies and 
procedures relating to response time, the type of compliance actior d 
violations identified, penalties assessed ai*d paid, and any iiyuries sus- 
tained by illegally employed minors. Where necessary, we supplemented 
the information obtained from the case files by interviewing the respon- 
sible WHO area office officials. 

We also irterviewed officials in the Office of Program Operations and 
the Office of Policy, Planning and Review at who's Washington, D.C., 
headquarters; and the who assistant regional administrator at the Bos- 
ton Regional Office, the Boston and Providence area office directors and 
the regional solicitor in Boston. We obtained who officials' comments on 
the reasons for the recent increase in child labor violations '^nd Labor's 
efforts to educate employers on child labor employment standards. We 
also obtained comments on the increase in child labor violations from an 
official at the Massachusetts Department of Labor. 

Our work was done from July 1987 to January 1988, and was per- 
formed in accordance with generally accepted government auditing 
standards. 



ERIC 



GAO/IIRD-fl8-S4 Enforcement of Child Labor Provisiona 



Apiiendix I 

The Fair Labor Standards Act: Enforcement 
of Child Labor Provisions in Massachusetts 



FLSA Child Labor 
Violations Have 
Increased Significantly 
in Massachusetts 



Violations of flsa child labor provisions have increased significantly in 
recent years, pai cicularly in the New England Region and the state of 
Massachusetts. Nationwide, who's records show that the number of 
nunors identified as employed in violation of fi^ rose from 8,999 in 
fiscal year 1983 to 19,077 in 1987, an increase of 10,078, or about 112 
percent. In Massachusetts, identified violations increased from C IO in 
1983 to 3,639 in 1987— an increase of 3,1 29, or about 614 percent. 



Table M shows the number of minors whd found employed in violation 
of FLSA during fiscal years 1983 through 1987 by all 10 Labor regions, in 
the New England Region, and in Massachusetts. 



Table 1.1 : Minors Illegally Employed, ^^^^^^^^^^^^^^^^^^^^^^^^^^HH^H^^H^HB 

Racal Years 1983-8/ Increaae 

1983 1984 1885 1988 1987 (1»83>87) 

All regions 8.999 8.877 9.836 12.662 19.077 10.078 

New England 944 753 1.182 1.371 6712 5.768 

M assachusetts' 510 370 462 840 3.639 3.129 

'The WHO assistant regional administrator in Boston told us that WHO regional offices report ^ork 
statistics by area office rather than by state and the Massachusetts figures were obtained fronfi Boston 
and Providence area office reports Since Providence also covers Rhode Island, the Massachusetts 
figures include some Rhode Island violations According to the Providence area office assistant director, 
about 60 percent of the violations are attributable to Massachusetts cases except in fiscal year 1987. 
when the number is closer to 90 percent 



According to the chief, whd Branch of Child Labor Programs in Wash- 
ington, D.C., headquarters, the nationwide increases in child labor viola- 
tions from 1983 to 1986 were net very significant. She said that the 
significant increase in 1987 was attributable primarily to the large 
increase in violations in New England, particularly in Massachusetts. 

whd's Boston area office and Massachusetts state labor officials gener- 
ally attribute the increase in child labor violations to the favorable eco- 
nomic conditions and low unemployment rate in Massachusetts. 
According to Labor's data, the state's unemployment rate was 2.3 per- 
cent (and Boston's rate was 2.0 percent) or less than one-half of the 
national 5.9 percent unemployment rate at November 30, 1987. whd 
officials told us tt^at employers are unable to hire enough adults to meet 
labor demands and, as a result, employers are making greater use of 
minors, thereby increasing the potential for child labor violations. 

The WHD Boston area director stated that the violations tend to be con- 
centrated around the hour and time standards. The assistant area direc- 
tor told us that supermarkets and fast food chains are the predominant 



Q Page 12 1 p GAO/HItD-8M4 Enfomment of Child Labor ProvUiona 

ERIC 



Appendix I 

The Fair Labor Standards Act: Enforcement 
of Child Labor Provisions in Massachusetts 



employers of child labor. Typically, the business hours of these estab- 
lishments extend beyond those allowed under flsa for minors under age 
16, according to whd officials. Thus, the officials stated, when 14- and 
15-year-old minors work during prohibited time periods or work more 
hours than allowed under the law, the employer is in violation of flsa 
hour and time standards. 



WHD Investigations of 
Potential Child Labor 
Violations in 
Massachusetts 



Tabit 1.2: Number of Establishmants Per 
Case Reviewed 



ERiC 



As statod earlier, we revie> *ed 13 randomly selected cases, covering 
compliance actions at 43 establishments. Table 1.2 provides a break- 
down of the number of establishment3 associated with the cases we 
reviewed in Massachusetts. 



Cases 


Establishments per case 


Total establishments 
reviewed 


7 


1 


7 


2 


2 


4 


1 


4 


4 


1 


5 


5 


1 


11 


6* 


1 


39 


17*^ 


13 




43 



^Only 6 of the 1 1 establishments investigated are in Massachusetts, the remainiiin 5 are in Rhode 
Island 

^Only 17 of the 39 establishments investigated are in Massachusetts, the remajntng 22 are in Maine 

li'S Wage and Hour Field Operations Division Handbook requires com- 
pliance officers to "fully documGnt" child labor violations, but does not 
provide specific instructions on how an investigation is to be conducted. 
According to the assistant area office directors in Boston and Pro^i 
dence, much is left to the discretion of the individual compliance officer. 
However, they stated that in most cases, the compliance officer reviews 
a sample of time cards within the investigation period— usually 2 
years— for each minor employed at the establishment at the time of the 
investigation. 

The compliance officer selects a judgmental sample based on allegations 
made in the complaints or information obtained in employee interviews, 
and the review usually includes an initial examination of only one or 
two time cards per minor. Depending on factors such as the condition of 



13 



PA^:e 13 



GAO/HSI>«M4 Enforcement of Child Ubor Pnnitlont 



Appendix I 

The Fair Labor Standards Act: Enforcement 
of Child Labor Provisions in Massachusetts 



the employer's records and the extent of violations in the initial sample, 
the compliance officer may expand the investigation by reviewing addi- 
tional time cards or checking the work schedules of former employees. 



Most Child Labor reviews, we found that whd did not substantiate alleged 

Violations Identified ^^^^^ \sbor violations in 4 Ci the 13 sample cases. In three of the four 

T 1 H T nrk0f^r Than cases, the investigations disclosed no evidence of child labor violations, 

inyoivea LOnpr- 1 nan- ^^^^^ employer was determined exempt from fi^. 

Allowed Work r erioas substantiated the alleged child labor violations in the remaining 

nine ::ases as shown in table 1.3. 



Table I.; - WHD Findings in Nine Cases ^^^^^^■^■^^^■^^^^^^^^^^^^^^^^^H 

Wfth Substantiated Child Labor Violations 

Violations Minors 



Type of establishment 


Number of 
establishments 


Hour/ 
time 


Hazardous 
occupations 


under 
age 14 


Total 


Restaurant 


2 


4 


6 


0 


10 


Nursing home 


1 


18 


2 


0 


20 


Retail variety store 


4 


5 


0 


0 


5 


Restaurant 


1 


1 


0 


0 


1 


Restaurant 


1 


1 


0 


0 


1 


Food service and 
housing operation 


5 


14 


2 


0 


16 


Supermarket 


17 


798 


1 


2 


801 


Restaurant 


6 


4 


0 


0 


4 


Supermarket 


2 


1 


22 


0 


23 


Total 


39 


846 


33 


2 


881 



In the nine cases in which whd substantiated child labor violations, com- 
pliance officers investigated 39 business establishments and identified 
881 violations affecting 880 minor employees. One minor was working in 
violation of the hour and time standards and was also found operating 
hazardous machinery. To summarize: 

• WHD found that minor employees were working longer hours or outside 
the time frames allowed under flsa child labor employment standards in 
all nine cases with substantiated violations. A total of 846 minors were 
working in violation of the hour and time standards. 

• In five of the nine cases, whd found that minors were employed in haz- 
ardous occupations prohibited by fisa. whd found 33 minors operating 
prohibited machinery, all of whom were operating meat slicers. Two of 
the 33 were also operating dough mixers. 



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Page 14 ^ ^ GAO/HRD-8M4 Enforcement of Child Labor Provtoiom 



Appendix I 

The Fair Labor Standards Act: Enforcement 
of CMd Labor Provisions in Massacliusetts 



"HD's policy, as stipulated in the Wage and Hour Division d Opera- 
^^ons Handbook , is to have compliance officers conduct an investigation 
whenever there is an alleged child labor violation and preliminary 
review indicates that the complaint is valid. The Boston area office 
director told chat any complaint alleging child labor violations is 
investigated; none are resolved through conciliation. 

According to a list of who compliance actions in Massachusetts during 
the first 9 months of fiscal year 1987, all of the 113 compliance actions 
at establishments with potential child labor violations were recorded as 
investigations. Our review of the case files for the 13 sample cases veri- 
fied that WHD conducted investigations in all 13 sample cases. Nine were 
initiated as a result of complaints, and the remaining 4 cases were 
directed investigations, initiated by whd. (See p. 17.) 



Timeliness of whd's goal is to maximize compliance with available resources and ser- 

in vestigations of Child ^^^^ legitimate complaints in a reasonable period of time. The Wage 

Labor Violations and Hour Division Field Operations Handbook says that where feasible, 

complaints will be scheduled on "a worst first" basis. Compliance 
officers are directed to give top priority to complaints alleging poten- 
tially dangerous situations that could affect employees' safety or wel- 
fare, such as child labor hazardous occupation violations. 

The handbook states that ordinarily the area offices should open an 
investigative case file within 10 days of receiving a complaint. However, 
the handbook contains no criteria specifying how soon after setting up 
the case file the area office is to initiate an investigation of the alleged 
violation. A whd national office official to'd us that the length of time 
between recei % a complaint and initiating an investigation varies 
among area ofi ^ ranging from 1 to 12 months. 

In the Boston area office, because of a complaint backlog, most flsa 
cases are delayed 5 to 6 months before compliance officers are able to 
begin investigations. According to Boston and Providence area office 
officials, they prioritize cases based on the nature of the allegations 
made when the complaints are filed. The Providence area office director 
told us that any complaint alleging child labor violations particularly 
allegations of minors working in hazardous occupations, is assigned to a 
compliance officer for immediate investigation. The Boston area office 
director told us that other high priority complaints include cases in 
which employee health or safety may be affected, minimum wage or 



WHD Area Offices 
Investigate Rather Than 
Conciliate Alleged Child 
Labor Violations 



Page 16 



GAO/HRD-SM4 Enrorcement of ChUd Labor ProvitioM 



AppewUzI 

The Fair Ishor SUndanb Aet* Euf omment 
of Child Udwr Provlsioiu in MaMAchiuetto 



overtime violations involving employees working on government con- 
tracts, and cases in which recovery of a back wage claim may be jeop- 
ardized due to the statute of limitations. 

We reviewed the response time in initiating investigations on the 13 
cases in our sample. In 6 of the 9 cases initiated as a result of a com- 
plaint, the files contained evidence that the compliance officer initiated 
an investigation within 1 month of when the complaint was filed. How- 
ever, response in the other 3 cases was ''elayed; investigations were not 
begun imtil 4 to 16 months after the complaints were received. Follow- 
ing is a discussion of the reason why the 3 investigations were delayed. 

• Case with a 4-month delay : According to the Boston assistant area direc- 
tor, WHD gave this case low priority because the complaint involved (1) a 
small business operation; (2) only one minor employee, who was the son 
of the manager; and (3) alleged violations of the hour and time stan- 
dards, rather than operation of hazardous equipment. In addition, he 
explained that the investigation was delayed because whd had problems 
obtaining substantive evidence to validate the allegations made during 
two previous investigations; in those cases whd lacked both witnesses 
and records showing hours worked. In the most recent investigation, the 
complaint was anonymous and whd antiapated similar problems. 

• Case with an 8-month delay : The Boston area office assistant director 
agreed the response time in this case was unusually h^ng. He could not 
provide any specific reasons for the delay, but speculated that th*i case 
was given a low priority because only one mine : employee was in solved, 
the complaint alleged the employee to be the owner's son, and hour and 
time standards violations, and not operation of hazardous equipment, 
were alleged. (Under flsa, minors employed by parents who are owners 
of the covered firms are exempt from certain of the child labor provi- 
sions, but may not work in hazardous occupations.) The compliance 
officer's investigation found no evidence of child labor violations. 

• Case with a 16-month delay : In this case, the complainant alleged that 
he was being paid straight time wages for overtime hours worked. 
According to the Providence area office director, the investigation was 
not given a high priority because the complaint did not involve allega- 
tions of child labor violatio s and also appeared to involve wage pay- 
ments to one individual rather than a widespread improper pay 
practice. Another reason given for the delayed investigation was staff- 
ing shortages; the area office director told us that, ac the time, whd did 
not have an experienced compliance officer available to initiate an 
investigation. The area office director also explained that based on the 
allegations made in the complaint, the complainant was needed both to 




Page 16 6A0/IIIU>4M4 Enrorcement of Child Labor Provitloiis 



16 



Apnendix I 

The Fair Labor SUndards Act: Enforcement 
of Child Labor Provtsions in MaMachiuettb 



substantiate the allegations and to receive back wages found due, if any. 
He said that whd sent a confirmation letter to the complainant, but it 
was returned because the complainant had moved without leaving a for- 
warding address. He added that whd received a second complaint from a 
different employee and this time opened the investigation withiii 1-1/2 
months of when the complaint was received. Our review of the whd case 
file confirmed this. 

Four sample cases were directed investigations initiated by whd and not 
as a result of complaints. The area office targeted employers for investi- 
gation in one case because the employer had multiple prior violations 
and in another because the employer was under investigation for alleged 
FLSA child labor violations in Rhode Island. In the third case, whd initi- 
ated an investigatir • after an off-duty compliance officer noticed and 
reported a prob" minor operating a meat slicer in a supermarket. 

A fourth case was initiated after whd found minors operating hazardous 
equipment at a particular manufacturing facility. As a result, whd offi- 
cials directed investigations at comparable manufacturing operations, 
one of which was in our sample. whd*s investigations disclosed viola- 
tions at three of the four targeted employers. Its investigation at the 
fourth employer was discontinued after whd learned that the firm had 
moved to a new building that did not contain the hazardous equipment. 



Civil Money Penalty in any investigation that discloses a child labor violation, flsa requires 

Assessments Department of Labor to consider the imposition of a civil money pen- 

alty of up to $1,000 per violation. The act also requires Labor to con- 
sider such factors as the size of the business charged with violation and 
the gravity of the violation when determining the amount of the pen- 
alty. The regulations also state that based on the available evidence, 
whd shall further determine: 

"(1) Whether the evidence shows that the violation is 'de minimus' (minimal), and 
that the person so charged has given credible assurance of future compliance, and 
whether a civil penalty in the circumstances is necessary to i chieve the objectives 
of the Act; or 

"(2) Whether the evidence shows that the person so charged had no previous his- 
tory of child labor violations, that the violations themselves involved no intentional 
or heedless exposure of any minor lo any obvious hazard or detriment to health or 
well-being and were inadvertent, and that the person so charged has given credible 
assurance of future compliance, and whether a civil penalty in the circumstances is 
necessary to achieve the objectives of the Act/' 



ERLC 



Page 17 



1 7 6AO/HRD48M EnfoKement of Child Ubor Pmitloiit 



Appendix I 

Tbe Fair Labor Standardt Act: Enforcement 
of Child Labor Provialona In MaaaacboaetU 



WHD area offices are required to use the formula in the Wage aiid Hour 
Divi sion Field Operations Handbook , which was established when the 
civil money penalties were enacted in 1974, to compute civil money pen- 
alty assessments. The handbook states that the formula is intended to 
maintain uniformity and consistency in imposing penalties. The formula 
assigns a monetary value to each violation, allowing for an aggregate 
penalty of up to $1,000 per minor found illegally employed. For exam- 
ple, employers are assessed $ 100 per minor for violations of the hour 
and time standards and $ 1 ,000 for each minor incurring a permanent 
total or partial disability or who dies because of the illegal employment. 
whd's formula also provides for reduced assessments when specific cri- 
teria are met. For example, penalties are reduced by (1) 50 percent if 
there is no evidence of recurring or willful violations or serious iryury to 
a minor, and (2) 20 percent if th'' employer has fewer than 100 
employees. 

If the employer takes exception lo the amount assessed by the whd area 
office, the handbook allows the whd assistant regional acbnudstrator to 
negotiate the final penalty amount with mployers. Moreover, under 
FLSA and Labor regulations, employers who are still dissatisfied with 
WHD or Labor's regional solicitor negotiations and/or the amount of the 
penalties assessed, may appeal the assessments to Labor's Chief Admin- 
istrative Law Judge, within 15 days after receipt of the notice of pen- 
alty, and request a formal hearing. 

WHD assessed and collected penalties in all nine cases in which whd com- 
pliance officers found evidence of child labor violations. As table 1.4 
shows, the total penalties assessed amounted to $519,830, and the 
amount actually paid was $206,730. One supermarket chain was 
assessed $511,400 (for violations at 39 stores in two states) and paid 
$200,000. 



ERIC 



Page 18 6A0/HBMM4 Enfomnait of Child Ubor PkovteloM 



Appendix I 

The Fair Labor SUndardt Act* Enf ommen t 
of Child Labor Proviaions in MaaaachuaetU 



Tabto 1.4: CMI Momy Penalties 
Aesetsed by WHD and Paid by 
Employers 



Type of establiehment 


Number of 
eetablishmentt 


Amount 
aaaeaeed 


Amount 
paid 


Nursing home 


1 


$1,150 


$1,150 


Restaurant 


1 


300 


?J0 


Restaurant 


1 


320 


320 


Restaurant 


2 


960 


700 


Supermarket 


2 


3.740 


2.300 


Retail variety store 


4 


1,000 


1.000 


Food services and housing operation 


5 


760 


760 


Restaurant 


6 


200 


200 


Supermarket 


17 


511.400* 


200.000» 


Total 




$519,830 


$206J30 



'WHD investigated 39 stores in this case, including 17 in Massachusetts and 22 in Maine The total civil 
money penalty assessed for all 39 stores was $51 1 .400, of which $214,600 was applicable to the Massa- 
chusetts establishments After negotiations with Department of Labor attorneys, the employer agreed 
to pay a lump sum $200,000 penalty 



In six of the nine ca^es in which liabor assessed penalties, the employer 
paid 100 percent of the assessment. In the remaining three cases, the 
employers objected to the initial assessments and negotiated reduced 
amounts. No cases were appealed to an administrative law judge. Table 
1.5 presents the results of the penalty negotiations. 



Table L5: Negotiated Civil Money 
PenaWet 


Penalty computed 
by compliance officer 


Negotiated 
emouffit 


Percentage of 

originel computation 




$960 


$700 


72.9 




3.740 


2.300 


615 




511.400 


200.000 


391 



Area office case files did not contain documentation of the factors con- 
sidered in negotiating reduced penalty assessments because the negotia- 
tions were conducted at the whd regional office or by the regional 
solicitor's office. In general, area office officials told us that the initial 
penalty assessment represents a recommended amount only. They 
stated that Labor's primary goal is to achieve compliance with flsa and 
not to maximize its penalty collections. 

Due to the nature or the violations identified in two of the cases, we 
questioned the reduced penalty assessments and interviewed responsi- 
ble WHD and regional solicitor officials to find out what factors were con- 
sidered in the negotiations. 



o 19 

^iQC PMel» GAO/HKMftMEiifoiteiiientofCiiUdl^^ 



Appendix I 

The Fair Lsbor Standards Act: Enforcement 
of Child Labor Provisions in Massachusetts 



In one case involving an initial assessment of $3,740 in penalties, the 
employer objected to the assessment, maintaining, among other things, 
that WHD failed to consider that there was no p^ or history of violations 
and that **the exposure of minors to hazards was slight." However, the 
investigation disclosed that 23 minors were operating meat-slicing 
devices and 1 1 of them sustained a total of 12 ii\juries. Four of the ii\ju- 
ries were considered serious, requiring stitches and at least 1 day away 
from work. 

According to the assistant to the whd assistant regional administrator, 
the factors considered in reduciTig this penalty were that (1) this was 
the first investigation if the employer and there was no history of viola- 
tions, and (2) the employer showed evidence of good faith having con- 
tacted the Massachusetts State Department of Labor to obtain state 
employment regulations. In addition, the assistant told us that if only a 
few hundred dollars is in question and the employer has demonstrated 
good faith, whd s informal policy is to agree to the reduction and obtain 
a commitment of future compliance. This policy allows Labor to avoid 
the time and costs associated with the employer appealing the assess- 
ment to Labor's Chief Administrative Law Judge. 

In the case involving the $511 ,400 assessment, whd initnted the investi- 
gation because the employer had a history of child labor violations. Due 
to the widespread nature of new violations identified early in the inves- 
tigation, WHD asked the regional solicitor to obtain an ii\junction to 
restrain future violations. As the investigation progressed, however, it 
became evident that the employer continued to violate child labor 
employment standards despite the injunction. Of the 801 minors found 
to be illegally employed, 2^8 were identified after the injunction was 
obtained. The counsel for flsa in the regional solicitor's office told us 
Labor did not consider contempt proceedings against the employer 
because the 268 violations occurred shortly after the injunction was 
obtained, within the same investigation period. However, he said that 
the employer was assessed additional penalties for minors found in vio- 
lation after the ii\junction was signed. 

According to the counsel for flsa, there was no documentation on the 
reasons for the assessment, although the regional solicitor's office proce- 
dures require the preparation of a justification memorandum outlining 
the rationale for any changes in the assessment resulting from negotia- 
tions. He said the memorandum was not completed because of an over- 
sight. He also stated there was no specific basis for the reduced 




Page 20 GAO/HEDM^Enforceinent of C%ild Labor lYoi^^ 



Appendix I 

The Fair Labor StamUrdfl Act: Enfoireiiient 
of Child Labor Pkwisions in Bfaasachosetto 



assessment He said that Labor considered the $200,000 settlement rea- 
sonable because the (1) caae involved primarily hour and time standard 
violations, which are considered less egregious than hazardous work 
violations, and (2) settlement represented the largest penalty for child 
labor violations Labor ever collected. 

Penalties generally appeared to be assessed in accordance with the 
standard formula and Labor's policy, as stipulated in the Wage and 
Hour Division Field Operations Handbook , which is to assess only one 
penalty per minor. Under the policy, the penalty amounts do not vary 
depending on the frequency or severity of the identified violations. For 
example, in one ci^se, three minor employees sustained a total of four 
serious injuries while operating meat-slicing devices. Although the pen- 
alty for a serious iiyuiy while engaged in illegal employment is $500, the 
employer was assessed $1,500 rather than $2,000. According to a com- 
pliance specialist in who's CSiild Labor Branch at Washington headquar- 
ters. Labor's policy is to asstess only one ii\jury-related penalty per 
minor — even if a minor sustains repeated serious ii\juries durng the 
period covered by the investigation. Although whd area officials told us 
that the case in question is highly unusual, it does raise the issue of 
WHD's policy for penalizing employers where a minor sustains multiple 
injuries. 



IlVjuries Sustained by whd compliance officers' investigations disclosed injuries occurring to 

Illegally Employed Minors illegally employed minors in one of the five cases in which whd identi- 
fied minors under 18 working in prohibited occupations. 

The Wage and Hour Division Field Operations Handbook classifies child 
labor employee iiyuries into three categories— permanent, serious, and 
nonserious. The handbook defmes a "permanent" ii\jury as one in which 
the employee has iiyuries that are total or partial, and are bodily, physi- 
ologically, or psychologically disabling. It defmes a "serious" ii\jury as 
one that causes the employee to miss 1 or more days of work. 

As noted earlier, the compliance officers identified 12 instances of 
injury to 11 iUegally employed minors. Of the 12, 8 were nonserious and 
4 were serious. All iivjuries were sustained by minors operating meat- 
slicing devices. The 4 serious iiyuries were cuts requiring stitches and at 
least 1 day away from work. 



ERIC 



21 

GAO/lIBI>«M4Enfoi«»nemorChildUlmPMvb.''oM 



Appendix I 

The Fair LabcM- SUndanb Act: Enforcement 
of Child Ulwr Provisions in Massnchnsettft 



Labor's Employer 
Awareness Activities 
Intended to Reduce 
Child Labor Violations 



WHD issues an annual information release, usually in late spring, which 
reminds employers of the child labor laws. The release is timed to coin- 
cide with the hiring of summer employees and is intended to inform 
employers and the public of the hour and time restrictions applicable to 
minors under age 16 and prohibited occupations for minors under age 
18. In addition, Labor periodically issues news releases announcing find- 
ings and settlements in nuyor cases. According to the whd assistant 
regional director, the region discontinued i sing televised public service 
announcements about 10 years ago. 

We discussed the recent increase in child labor violations, particularly 
Massachusetts, and whether it indicates a need to expand employers' 
av^areness of flsa child labor provisions. However, v/m regional and 
area offlce offlcials believe that expanding employer education activi- 
ties would not be warranted because they attribute the marked increase 
in child labor violations to current economic conditions rather than 
employer ignorance of child labor employment standards. For example, 
the assistant area director in Providence believes that additional public 
awareness campaigns would have no impact on the incidence of child 
labor violations; he believes that the short labor supply in Massachu- 
setts results in hiring more minors and employing them in ways that vio- 
late FLSA. The WHD assistant regional administrator agreed that most 
employers are aware of the child labor laws and that supplementing 
existing publicity is unnecessary. 



Labor to Evaluate 
Child Labor 
Employment 
Standards 



The chief of the Child Labor Branch in Washington, D.C., told us that the 
child labor employment standards and related issues are being evalu- 
ated at the national level. The chief stated that some of the regulations 
establishing these standards — particularly the hazardous Jers — have 
remained virtually unchanged since they were promulgated in the 
1940's subsequent to flsa enactment in 1938, although there have been 
changes in the industries covered by the standards. In August 1987, the 
Secretary of Labor established a Child Labor Advisory Committee to 
"provide advice and recommendations to assist the whd in effectively 
administering the child labor provisions of fisa.'' The committee repre- 
sents a broad spectrum of views, and includes individuals from child 
advocacy groups, employers, unions, academia, safety groups, as well as 
others. According to its charter, the committee will work on the develop- 
ment of child labor standards and policies for advancing child labor pro- 
tection and safe employment conditions for young workers. The 
advisory committee had its initial meeting in March 1988. 



ERLC 



Page 22 



6AO/HRI>«M4 Enforcement of Child Labor ProvMoM 

22 



Appendix I 

The Fair Labor Staiulards Act: Enforcement 
of Child La?M>r Provisions in Riassachusetts 



The limited scope of our review precludes formal recommendations to 
the Secretary of Labor; however: we identified a policy issue that Labor 
should consider referring to the Child Labor Advisory Ck)mmittee. Cur- 
rently, Labor assesses firms one penalty per minor even when a minor 
sustains more than one serious iiyury when employed in a prohibited 
occupation. This policy appears to be contrary to Labor's overall goal of 
protecting minor employees and warrants review by the advisory 
committee. 



Page 28 23 GAO/HRI>«»IMEnfomnient of Child Labor Prr lsions 



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