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Statement of Bernard E. Anderson Assistant Secretary for Employment Standards

Fiscal Year 2001 Request
for the Employment Standards Administration

Mr. Chairman and Members of the Committee:

I am pleased to have this opportunity to appear before you today to discuss the Fiscal Year 2001 budget for the Employment Standards Administration (ESA). ESA is the largest agency in the Department of Labor with over 4,000 employees located in offices throughout the country. Because we administer dozens of laws enacted by Congress that cover nearly every worker in America, we make every effort to be as accessible to the American worker as possible, whether through our physical presence in the field, the use of the Internet, or through some other means.

Secretary of Labor Herman has discussed how innovative the Department's FY 2001 proposals are and how they build upon the solid accomplishments of recent years. I would like to echo that view because that is certainly the case with the Employment Standards Administration. In the past few years we have made great strides in addressing problems in child-labor, the garment and agricultural industries, and in pay discrimination. We have worked to better manage our workers' compensation programs and have made great improvements in reducing the number of days lost due to Federal workplace injuries or illnesses. We are also moving ahead with our initiative to provide Internet based public disclosure of union financial reports. Our experience with Strategic and Performance planning has helped us to concentrate our efforts where they can provide the most benefit.

ESA's work is vital to the Department's success in achieving the Secretary's goals of a Secure Workforce and Quality Workplaces. The ESA strategic plan goals are: 1) to create better workplaces by increasing employer and employee awareness of, commitment to, and involvement in assuring fair wages and equal employment opportunity, minimizing the impact of work related injuries, and safeguarding union democracy; and 2) to secure public confidence through excellence in the management and delivery of ESA's programs and services. Our FY 2001 budget request not only supports these ESA goals and furthers the achievement of two of the Secretary's strategic goals, but builds upon our most recent accomplishments.

ESA's total Salaries and Expenses request for FY 2001 is for $393.9 million and 3,934 FTE, including $13.6 million and 32 FTE associated with new or expanded initiatives in FY 2001. Overall, ESA's FY 2001 request provides resources totaling $26.4 million and 32 FTE more than the FY 2000 funding and staffing levels. Another $30.5 million and 129 FTE are requested through the Federal Employees' Compensation Special Benefits Fund Fair Share assessments.

Enforcement of Wage and Hour Standards

The Fair Labor Standards Act -- which establishes the minimum wage, overtime standards and child labor restrictions -- protects the most vulnerable in the workplace, low-wage workers and the working poor. Even in today's economy, violations of this law still occur. Investigation-based compliance surveys of the Los Angeles and New York garment manufacturing industries found that fewer than 40 percent of employers met the minimum wage and overtime requirements. The same low level of compliance with the Fair Labor Standards Act and Migrant and Seasonal Agricultural Worker Protection Act was found in a national survey of poultry processing plants. And only 70 percent of nursing home employers and 57 percent of residential care facilities are in compliance with the Fair Labor Standards Act.

The Wage and Hour Division has a long-term goal of increasing compliance with labor laws -- especially in these low-wage industries like garment manufacturing, agriculture, health care, as well as restaurants, hotels/motels, guard service and janitorial service. The goal of increasing compliance is expressed in the Wage and Hour Division's Performance Plan that was adopted in response to the Government Performance and Results Act (GPRA). We are focusing on the low-wage industries because they have a historically high level of noncompliance and employ vulnerable workers who often won't complain about violation of their workplace rights. It is a difficult challenge to realize lasting changes in compliance behavior in these sectors of the economy. In 1999, with the additional resources sought and obtained by the President, Wage and Hour conducted national enforcement initiatives geared to increased labor law compliance -- especially in agriculture -- in the salad bowl crops of lettuce, onions and cucumbers, and in garment manufacturing.

In addition, Secretary Herman has made the safe and legal employment of youth a priority for the Department and we are looking at innovative steps, including enforcement, education, and partnerships, that can be taken to ensure that workplaces are free from illegal child labor. Last June, Secretary Herman launched a new child labor initiative, Safe Work/Safe Kids, to bring national focus to the need for both increased child labor compliance and the creation of safe, legal and positive work experiences for our youth. In addition, Wage and Hour conducted some 50 local child labor initiatives targeted at increasing compliance in industries such as restaurants, retail establishments, grocery stores and amusement parks where youths are most commonly employed, These initiatives, involving almost 1,800 investigations, found nearly 2,200 minors illegally employed and resulted in fines of $1.7 million against 314 employers.

Turning to FY 2001, Wage and Hour is requesting $6.3 million in additional funding for five specific initiatives to: (1) implement a nationwide toll-free number and "expert" systems that provide callers with accurate and timely information; (2) increase compliance with domestic child labor safety and health standards and reduce on-the-job injuries to young workers through enhanced education/outreach and partnership with other governmental, non-governmental, and business organizations; (3) increase compliance through enhanced enforcement, particularly through strike force efforts in targeted industries; (4) begin a three year cycle to replace desktop and laptop computers and to finance Wage and Hour's share of increased information technology infrastructure costs; and(5)fully fund enforcement efforts in the Commonwealth of the Northern Mariana Islands (CNMI). Total resources requested for Wage and Hour will provide $152.7 million, an increase of $10.8 million. The FTE level will remain at 1,528.

Federal Contractor EEO Standards Enforcement

The Office of Federal Contract Compliance Programs (OFCCP) has proposed a Fiscal Year 2001 budget of $76.3 million and 813 FTE. OFCCP supports the Secretary's Strategic Goal for Quality Workplaces through the outcome goal to Foster Equal Employment Opportunity Workplaces. To realize this goal, OFCCP is working to redefine all GPRA performance goals related to increasing the number of Federal contractors brought into compliance with the Equal Employment Opportunity provisions of federal contracts. OFCCP will continue the President's Equal Pay initiative begun in FY 2000. Additionally, in support of Secretarial and Administration goals, OFCCP seeks an additional $500,000 and five FTE for this initiative to assist contractors in addressing pay disparity problems outside of the enforcement context.

This request will utilize resources to develop and implement Industry Partnerships. OFCCP will provide professional and consistent industry wide technical assistance regarding compensation practices. OFCCP will advance an industry partnership agenda that will identify and assess various methods to assist contractors in addressing pay disparity problems outside of the enforcement arena. OFCCP will identify and explain best practices and successful self-audit strategies relevant to specific industries and share summary Equal Opportunity Survey data with those industries.

Federal Programs for Workers' Compensation

The Office of Workers' Compensation Programs (OWCP) administers three major disability compensation programs that ease the financial burden on certain workers, or their dependents or survivors, resulting from work related injury, disease, or death. OWCP's Salaries and Expenses request for FY 2001 is for $120.9 million and 1,184 FTE, an increase of $10.9 million and 25 additional FTE. Another 129 FTE are funded through the Federal Employees' Compensation (FECA) Special Benefits fund Fair Share assessments and 17 FTE are funded in Black Lung through the reimbursable agreement with the Social Security Administration.

Part of the Secretary of Labor's second Strategic Goal of a Secure Workforce is supported in the Outcome Goal to Protect Worker Benefits. OWCP supports achievement of that goal by getting injured workers taken care of, paid properly and promptly, and making sure they understand what is happening in the process. OWCP works to get injured workers back on the job as soon as is medically advisable, keep the costs of OWCP programs in line, and, in so doing, protect the interests of not only the injured workers, but those of their employers and the Federal Government. In dedicating itself to these goals, OWCP has accomplished much in recent years.

Since 1992, OWCP's use of early nurse intervention in new disability cases and vocational rehabilitation services have helped over 34,000 injured Federal employees return to the workplace, and careful evaluation of long-term disability cases under FECA's Periodic Roll Management has netted more than $400 million in benefit savings. OWCP has reduced the average length of disability in new FECA time-loss cases by 9% since 1997, and established a new measurement of disability time loss for all Federal cases under the Presidential Initiative, Federal Worker 2000. Fee schedules have reduced charges for medical service by millions of dollars; a quality assurance program has been established to review physicians' bills for duplication and other improper practices. Federal agencies are being helped by FECA to gain better access to claims information, speed the filing of new injury notices and better service for their injured employees.

Underpinning its strategic-level performance is OWCP's investment in automated system solutions. Major spending initiatives in FY 2001 include the continuing redesign of the Federal Employees' Compensation Act (FECA) computer system and a transition to "paperless" operations. This latter project includes installing document imaging systems in FECA district offices and converting approximately 85,000 paper case files to electronic form. OWCP's budget also supports the Departmental Information Technology Crosscutting Initiative to procure compatible hardware and software maintenance and support for DOL's common IT architecture; enhance system security; and purchase long-term licensing for a common database management system.

To improve program effectiveness and address customer service deficiencies, OWCP will revamp its communications system and adapt industry best-practices solutions for the FECA program; centralize call processing for consistent and sound medical treatment authorizations; train FECA staff for strengthened customer relations; expand claimant and employer access to FECA claims information; and restructure the FECA claims examiner positions to better focus on case management.

In last year's appropriation bill, Congress directed the Administration to provide its recommended action to address growing Black Lung Disability Trust Fund (BLDTF) indebtedness. As reflected in the President's FY 2001 budget request, the Administration will propose legislation this year that authorizes a refinancing of the outstanding BLDTF debt, extends the BLDTF excise tax levels, set to expire in 2014, at current rates, and provides a $1.5 billion appropriation to compensate the General Fund for the foregone prepayment premium. Generally speaking, the prepayment premium approximates the charge that banks levy to recoup at least part of the interest lost when loans are refinanced at a lower rate.

Office of Labor-Management Standards

The resources requested for this activity in FY 2001 are $30.6 million and 290 FTE. This includes a request for $143,000 and 2 FTE to address workload increases in employee certifications in a timely manner.

In FY 2001, OLMS will conduct complaint-based investigations to ensure democratic union officer elections and supervise remedial officer elections as required. OLMS will conduct criminal investigations and investigative union audits under its streamlined audit programs to safeguard union financial integrity. In FY 2001, OLMS also will implement a new electronic filing and Internet-based public disclosure system for reports filed under the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), principally some 32,000 union financial reports. Performance goals will emphasize two key objectives in this program area. A key objective will be to secure timely filing by unions with $200,000 or more in annual receipts since they generate the most public disclosure interest. Another will be to increase the number of filed union annual financial reports that meet standards of acceptability. As necessary, OLMS will conduct investigations to determine whether reports are required of employers, labor relations consultants, and union officers and employees on the basis of activities conducted. Performance results for LMRDA program goals will be tracked using information from established labor organization reporting and case data systems.

Compliance assistance for union officials and outreach to inform union members concerning their LMRDA rights will be continued. Partnerships with major international unions also will be fostered to seek their assistance in promoting compliance by affiliates with statutory reporting requirements.

The OLMS Division of Statutory Programs will continue certification of employee protection arrangements. A major objective will be to complete all certifications within 60 days of referral, consistent with applicable guidelines, even with workload increases anticipated as a result of new transit grant programs. Performance results will be tracked using information from an established case processing system.


Mr. Chairman, this concludes my formal statement. I appreciate the support you have given the Employment Standards Administration in the past and the opportunity to appear before you today and discuss our proposals for the next fiscal year. My colleagues and I will be happy to respond to any questions regarding the proposals in our FY2001 request.

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