The federal agency charged with enforcing minimum wage, overtime and many other labor laws is failing in that role, leaving millions of workers vulnerable, Congressional auditors have found.
In a report scheduled to be released Wednesday, the Government Accountability Office found that the agency, the Labor Department's Wage and Hour Division, had mishandled 9 of the 10 cases brought by a team of undercover agents posing as aggrieved workers.
In one case, the division failed to investigate a complaint that under-age children in Modesto, Calif., were working during school hours at a meatpacking plant with dangerous machinery, the G.A.O., the nonpartisan auditing arm of Congress, found.
When an undercover agent posing as a dishwasher called four times to complain about not being paid overtime for 19 weeks, the division's office in Miami failed to return his calls for four months, and when it did, the report said, an official told him it would take 8 to 10 months to begin investigating his case.
"This investigation clearly shows that Labor has left thousands of actual victims of wage theft who sought federal government assistance with nowhere to turn," the report said. "Unfortunately, far too often the result is unscrupulous employers' taking advantage of our country's low-wage workers."
The report pointed to a cavalier attitude by many Wage and Hour Division investigators, saying they often dropped cases when employers did not return calls and sometimes told complaining workers that they should file lawsuits, an often expensive and arduous process, especially for low-wage workers.
During the nine-month investigation, the report said, 5 of the 10 labor complaints that undercover agents filed were not recorded in the Wage and Hour Division's database, and three were not investigated. In two cases, officials recorded that employers had paid back wages, even though they had not.
The accountability office also investigated hundreds of cases that it said the Wage and Hour Division had mishandled. In one, the division waited 22 months to investigate a complaint from a group of restaurant workers. Ultimately, investigators found that the workers were owed $230,000 because managers had made them work off the clock and had misappropriated tips. When the restaurant agreed to pay back wages but not the tips, investigators simply closed the case.
In another case, the accountability office found that workers at a boarding school in Montana were not paid more than $200,000 in overtime. But when the employer offered to pay only $1,000 in back wages as the two-year statute of limitations approached, the division dropped the case.
"We have a crisis in wage theft, and the Department of Labor has not been aggressive enough in recent years," said Kim Bobo, executive director of Interfaith Worker Justice, a group that advocates for low-wage workers. "The new secretary of labor says she's the new sheriff in town, but I'm concerned she's facing the wild, wild West of wage theft."
Secretary of Labor Hilda L. Solis said she took the report's findings seriously.
"I am committed to ensuring that every worker is paid at least the minimum wage," Ms. Solis said, "that those who work overtime are properly compensated, that child labor laws are strictly enforced and that every worker is provided a safe and healthful environment."
Ms. Solis said the Wage and Hour Division planned to increase its staff by a third by hiring 250 investigators - 100 of them as part of the federal stimulus package - "to refocus the agency on these enforcement responsibilities" and "ensure that contractors on stimulus projects are in compliance with the applicable laws."
Ms. Solis said the hirings would "reinvigorate the work of this important agency."
Ms. Solis's predecessor, Elaine L. Chao, often defended the Wage and Hour Division, saying it had concentrated on larger, tougher cases, and secured back wages for more than 300,000 workers a year and collected more than twice as much annually as the division had done in the final years of the Clinton administration.
The report concluded that the Wage and Hour Division had mishandled more serious cases 19 percent of the time. In such cases, the accountability office said, the division did not begin an investigation for six months, did not complete an investigation for a year, did not assess back wages when violations were clearly identified and did not refer cases to litigation when warranted.
"When you have weak penalties and weak enforcement, that's a deadly combination for workers," said Representative George Miller, Democrat of California, who, as chairman of the House Education and Labor Committee, asked the accountability office to do the report. "It's clear that under the existing system, employers feel they can steal workers' wages with impunity, and that has to change."
Mr. Miller, whose committee is scheduled to hold a hearing on wage and hour enforcement on Wednesday, said he would push to enact tougher penalties for wage violations and laws that made it easier for workers to join class-action lawsuits.
The report said undercover agents recorded Wage and Hour Division officials urging workers who complained to file lawsuits. And on one recording, an investigator appeared to back off quickly on demanding back pay when an undercover agent posing as a wage-violating employer said he was financially stretched.
According to the report, the employer said, "Well, you know, like I said, all of our contracts have dried up, we really don't have anything coming in, so. ... ."
The investigator responded, "O.K., so you're not in a position where you can pay him?"
When the employer said no, the investigator seemingly gave up, saying he would let the worker "know that he has a private right of action to pursue the funds."
The report expressed dismay with that approach. "Low-wage workers may be unable to afford attorney's fees or may be unwilling to argue their own case in small-claims court," it said, "leaving them with no other options to obtain their back wages."