OPENING STATEMENT OF THE HON. CHARLIE NORWOOD, VICE CHAIRMAN, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE, US HOUSE OF REPRESENTATIVES *

STATEMENT OF ERNEST GELLHORN, PROFESSOR OF LAW, GEORGE MASON UNIVERSITY *

STATEMENT OF IDA L. CASTRO, ACTING DIRECTOR, WOMEN'S BUREAU, US DEPARTMENT OF LABOR *

STATEMENT OF SUZANNE B. SEIDEN, ACTING DEPUTY ADMINISTRATOR, WAGE AND HOUR DIVISION, EMPLOYMENT STANDRDS ADMINISTRATION, US DEPARTMENT OF LABOR *

Appendix A – Letter Written by Deputy Secretary of Labor Kathryn Higgins to the Honorable William F. Goodling, Chairman, Committee on Education at the Workforce. *

Appendix B – Written Statement of Hon. Charlie Norwood *

Appendix C – June 18 Written Response by John Fraser, Acting Administrator, Wage and Hour Division, Employment Standards Administration, US Department of Labor to the Hon. Pete Hoekstra, Chairman, Subcommittee on Oversight and Investigations, Committee on Education and the Workforce *

Appendix D – Written Outline of Comments on Procedures of DOLs Recognition Programs by Professor Ernest Gellhorn *

Appendix E – Attachment from Professor Ernest Gellhorn of the 1993 Code of Federal Regulations Incorporating Good Practices for Administrative Agencies. *

Appendix F – Written Statement of Ida L. Castro *

Appendix G – Written Statement of Suzanne B. Seiden *

Appendix H – Letter Written to Stanley W. Levy, Attorney, Greenberg, Glusker, Fields, Claman & Machtinger, LLP, from Suzanne Seiden Regarding Guess? Inc.’s Status on the Trendsetter List *

Appendix I – Letter Written to Suzanne Seiden from Della Bahan, UNITE Attorney, Rothner, Segall, Bahan & Greenstone, Regarding Summary of Charges Pending Against Guess?, Inc. for Violations of the Fair Labor Standards Act *

Appendix J – Letter Written to Secretary of Labor Robert Reich from Paul Greenberg, Chairman, Jewish Labor Committee, Regarding USDOL Garment Industry Trendsetter List and Guess?, Inc. *

Friday, June 19, 1998

U.S. House of Representatives

Committee on Education and the Workforce

Subcommittee on Oversight and Investigations,

American Worker at a Crossroads Project

Washington, D.C.

The subcommittee met, pursuant to call, at 10 a.m., in Room 2175, Rayburn House Office Building, Hon. Charlie Norwood [vice chairman of the subcommittee] presiding.

Present: Representatives Norwood, Hoekstra, Ballenger, Schaffer, Mink, Scott and Ford.

Staff Present: Jan Faiks, Worker Project Director

Paul Boertlein, Worker Project Communications Director

Arturo Silva, Worker Project Media Assistant

Stephen Settle, Worker Project Counsel

William Matchneer, III, Worker Project Chief Counsel

Kimberly Reed, Professional Staff Member

Stevan Johnson, Worker Project Office Manager

John P. Flannery, Minority Worker Project Counsel.

 

Mr. Norwood. A quorum being present, the Subcommittee on Oversight and Investigations of the Committee on Education and the Workforce will come to order.

This subcommittee is meeting today to hear the testimony for the American Worker at a Crossroads Project. Under rule 12(b) of the committee rules, any oral statement at the hearing is limited to the Chairman and the Ranking Minority Member. This allows us to hear from the witnesses sooner and help Members keep to their schedules. Therefore, if other Members have statements, they can be included in the hearing record.

Witnesses should be advised that any additional information or testimony that they would like to have entered into the hearing record may be done in the next 3 days.

Before I introduce the panel of witnesses or make my opening statement, I have two preliminary matters I would like to address.

Number 1, as a preliminary matter I want to put on the record that the Wage and Hour Division failed to produce in a timely fashion certain documents that were requested several weeks in advance of this hearing. A deadline of Friday, June 12, was placed on production of this information, a full week ago.

Other than being told that problems were being encountered, no rationale was provided for this gross omission. We finally received this information yesterday shortly before 4 p.m. Of course, this information was to enable this subcommittee to properly prepare and conduct its oversight mission on behalf of the American people.

Ms. Seiden, I want you and Mr. Fraser to inform the Secretary that this subcommittee will not tolerate this type of tardiness. I want you to tell the Secretary she will be held personally accountable in the future for this type of delay.

Ms. Seiden, do you understand?

Ms. Seiden. Yes, sir.

Mr. Norwood. Now, obviously the subcommittee has not had the proper amount of time to give these documents the review they deserve. Accordingly, Ms. Seiden, be aware that at a minimum the subcommittee will be following this hearing with a number of questions related to these documents. If the subcommittee finds it necessary, we place you on notice that you may have to return when Mr. Andrew Samet of the International Labor Affairs Bureau is called to testify.

For the public’s information, Mr. Samet was asked to testify today, but was unable to join us.

Preliminary statement number 2. There is another matter I must attend to before making my opening statement. I want to address a serious issue that was raised during my preparations for this hearing. Before me is a letter from Kathryn Higgins, Deputy Secretary of Labor. This letter is addressed to Chairman Goodling. It states, "The Department’s long-standing preference is for the representatives to appear on a separate panel of their own."

As of last week, I was informed that the Labor Department would refuse to appear before this oversight panel unless they were allowed to testify separately from Professor Gellhorn. Professor Gellhorn does not appear that scary to me. He looks like a pretty nice fellow. Professor Gellhorn, do you have a past with the Labor Department that we are not aware of?

Mr. Gellhorn. I am anxiously awaiting to hear what it is.

Mr. Norwood. I want to say this. In a representative form of government, a Member of Congress conducts business on behalf of the American taxpayer. A congressional oversight hearing is merely a conduit for exploring whether certain decisions made or actions taken by its government are in the best interest of its citizens. We want to make sure that we are acting in the best interest of our citizens, not in the best interest of our bureaucrats.

I personally choose to conduct this hearing in a single-panel format because I want the American people to hear discussions about its government rather than simply having bureaucrats report on their efforts. I choose to have this discussion because I want the people to hear legal theory contrasted with the actual practice of the government. In other words, I envision a two-way street wherein bureaucrats learn from having their actions analyzed by learned people such as Professor Gellhorn. I see nothing harmful to the government’s interest in that, and I see a lot of benefit, such as having government learn from its mistakes.

I and Mr. Hoekstra and Chairman Goodling are always willing to listen when occasions arise where the interests of the American people will be hurt rather than helped by discussions on policy matters. Well, I am going to agree that the Department deserves its own panel, but frankly that is a decision that will be made by this committee, not by bureaucrats. So with this misunderstanding clarified for the future, let’s get on with the people’s business.

And, Ms. Mink, without objection, I will place Ms. Higgins’ letter in the record.

Mrs. Mink. No objection.

Mr. Norwood. Now, I am going to start with an opening statement and then ask Ms. Mink to do the same.

I call this hearing to resolve some questions that this subcommittee still has from our last hearing. At that May 8 hearing we learned that three agencies at the Department of Labor published three different lists recognizing employers for good workplace practices. These lists were not published under the normal regulatory rules and procedure. One other agency, OSHA, has a list of 12,000 employers it targets for its Cooperative Compliance Program.

We also learned that one of these lists was not only used to reward good companies, but actually to punish other companies. Although I admit the Wage and Hour Division doesn’t see it that way, this list, the List of Fashion Trendsetters, was put together according to John Fraser, the Acting Administrator at the Wage and Hour Division, by "a committee that reviewed the applications and assessed those against the criteria that had been publicized and made a determination as to whether the applications satisfied those criteria."

Or, maybe as I would like to put it, a few bureaucrats decided in a back room who was good and who was bad in the garment industry. This committee, Mr. Fraser mentions, consisted of representatives from the International Labor Affairs Office, the Wage and Hour Division, and the Assistant Secretary for Policy.

Today we will learn what happened when this committee met. Mr. Fraser admitted to me at the last hearing that there were no safeguards in place to prevent this committee from making subjective decisions. And as Mr. Fraser said, and I quote, "I agree that if there were secret back-door communications, I would not know about it."

There can be a giant chasm between noble purpose and practice. I cannot doubt that the goals of the agencies publishing these lists are noble, but the means to achieving these goals deserve scrutiny, and I assure you that is what we are going to do here today. I am interested in evaluating if objective or subjective decision-making was used by the Trendsetter List committee and other decision-making entities within the Department of Labor.

One of our responsibilities here is to determine whether agency conduct is in line with their mandate from Congress and is it fair to all parties. The Wage and Hour Division has undergone vigorous oversight by Congress in the past, and I want to thank the officials with that agency for helping us and the American taxpayers understand how business is conducted at the Labor Department.

In contrast, one bureau, to my knowledge, has never before been subject to oversight. As one of the agencies publishing a list recognizing honorable employers, we thought it would be unfair not to invite a representative from that agency to this hearing. As a consequence, we will hear from Ms. Castro regarding that agency’s activities. I want to assure Ms. Castro that the lack of oversight by Congress of her agency in the past does not reflect on the merits of the work of the Women’s Bureau. I believe the mission of the Women’s Bureau is quite meritorious, frankly, and I assure her that Congress no longer will neglect the agency.

In my hand I have a book published by the Committee on Un-American Activities. It is called The Guide to Subversive Organizations and Publications. This guide came from the same committee that Joe McCarthy sat on when he engaged in many questionable activities. It so happens that this guide was published in 1961, after the McCarthy era, but could you imagine if due process was not used when determining which organizations belonged on this list?

We all know that during the McCarthy era the Un-American Activities vigorously pursued its goal of ridding our government of Communist infiltrators. I think most of us would agree that ridding our government of Cold War Communists was a laudable goal. Many of us also believe, however, that the methods used by Mr. McCarthy, Senator McCarthy, were improper.

Today, fortunately, we find ourselves in a situation that is not nearly as dire, but clearly we learned in the past that laudable goals are not enough. I do think that the Department’s desire to recognize honorable employers is praiseworthy. The means used by the Department to achieve its goals, however, are as important as the goals themselves. Often, when the means are found to be improper, the goals are perceived to be something different than what they are said to be.

I can’t believe that the stated goals of the list put out by the Department of Labor are anything other than what the Department claims. That is why we are here today. We want to make sure that the means to achieve these goals are clearly defined as being proper so the Department can get on with the business of achieving its very worthwhile objectives.

Mr. Norwood. I now yield to the Ranking Minority Member, Mrs. Mink, for whatever statement she would like to make.

Mrs. Mink. Thank you, Mr. Chairman. I would request that the television camera that I have not authorized not be here in front of the committee. Since the Chair has insisted upon reading rules that we ought to be following, I would like to raise a point of order with respect to the camera that is walking up in front of your presentation this morning.

Mr. Chairman, the rules of the committee page 13 says, number 5, "Television cameras shall operate from fixed positions, but shall not be placed in positions which obstruct unnecessarily the coverage of the hearing or meeting."

Number 9; "Photographers shall not position themselves at any time during the course of a hearing between the witness table and members of the committee."

Number 11; "Personnel providing coverage by television radio media shall be accredited by the Radio and Television Gallery."

So I would request, Mr. Chairman, if the personnel carrying the cameras this morning have been accredited, and if so, I ask unanimous consent that the accreditation be placed in the record at this point.

Mr. Norwood. Thank you, Mrs. Mink. I am so glad you are here. I thought we had checked with you on that, but certainly your point is well taken, and we will be delighted to abide by your wishes.

Would you like to have your opening statement?

Mrs. Mink. I would like to see the accreditation of the personnel that has been walking up and in which I have been involuntarily photographed before I proceed. Otherwise I don’t believe that the film that he has taken this morning is either appropriate or valid or should be in the public record at all.

Mr. Norwood. I don’t think that it is going to be in the public record. Here is the accreditation.

Mrs. Mink. Is there an accreditation for this filming this morning?

Mr. Norwood. I don’t know.

Mrs. Mink. I certainly didn’t get any information that we were going to be filmed. But anyway, and who does he represent?

Mr. Norwood. I think it was CBS.

Mrs. Mink. CBS? Did you at any time get permission to walk up in front of the committee and film us in this way? I certainly did not give any permission or have any prior notice.

Mr. Norwood. We were confused. We thought the Chairman could give him permission and you would be all right with it, so I told him it was fine.

Mrs. Mink. I had no knowledge of any such permission. Mr. Chairman, you also made reference to the failure of the Department of Labor to respond to your question, and so I would like to ask unanimous consent that the letter to which you made reference of May 29 be inserted in the record at this point and that the response to that inquiry dated June 18 also be placed in the record.

Mr. Norwood. So ordered.

Mrs. Mink. And I will waive my opening statement. Thank you.

Mr. Norwood. Thank you, Ms. Mink. I need to remind our witnesses that they have been invited to speak for 5 minutes before the subcommittee. But as I mentioned earlier, they may submit additional copy or information for the record if they see fit to do so. We are truly fortunate to have a group of people with us today who will share with the subcommittee some of their thoughts and experiences.

I need to remind my colleagues and the witnesses that this is not a Department of Labor bashing session. It is, however, part of an ongoing conversation with the American worker about what works and what doesn’t work in the American workplace.

I would like to thank each of the witnesses for coming today. I value what each of you has to add to our conversation on the American work force. We will pose questions after all of the members of the panel have completed their testimony.

First we have Dr. Ernest Gellhorn, who is a professor of administrative law at the George Mason University School of Law in Arlington, Virginia. Professor Gellhorn was chairman of the American Bar Association section on administrative law from 1990 to 1991. He was on the rules committee of the Administrative Conference of the United States, 1986 through 1995. Thank you very much, Dr. Gellhorn, for coming today, and we look forward to your very unique and informed perspective on this issue.

Ms. Castro is Acting Director of the Women’s Bureau at the Department of Labor here in Washington, D.C. Ms. Castro is an attorney and has been actively involved in women’s and labor issues throughout her entire career. She has been at the Department of Labor since 1994. More recently she was Acting Deputy Solicitor at DOL. Before that she was Deputy Assistant Secretary for Workers Compensation Programs and the Employment Standards Administration. Welcome, Ms. Castro, I look forward to your remarks.

Ms. Suzanne Seiden is the Acting Deputy Administrator of Wage and Hour Division at the Department of Labor here in Washington. Before that she was Director of Special Projects at DOL in which position she was in charge of the Trendsetters Program of the No Sweat Initiative, which makes her an exceptionally appropriate panelist today.

Thank you for your fine cooperation in pulling this hearing together and for being with us here today, Ms. Seiden.

Will the witnesses please rise and raise their right hands.

[Witnesses sworn.]

Mr. Norwood. Let the record reflect that each of the witnesses has answered in the affirmative.

Professor Gellhorn, would you please begin with your statement.

Mr. Gellhorn. Thank you very much, Mr. Chairman. I appreciate the opportunity for submitting an outline for the record, which also includes an attachment from the Code of Federal Regulations in 1993 which incorporate good practices for administrative agencies.

I have been asked to give a brief overview of our appropriate and required practices for administrative agencies, and that is what I thought I would do initially, apply it briefly to the Trendsetter and Honor Roll Programs as I understand them and how they have been explained in previous hearings, and then perhaps suggest some alternative solutions that this committee or others might consider.

Turning first to an overview of the requirements, administrative hearings have no inherent authority. Their authority is limited to that which Congress authorizes, and only the Congress can authorize it. Article I, section 8 of the Constitution provides that all lawmaking power shall reside with the Congress.

Second, for an agency to take action, any action, particularly an action that has an adverse effect on any private individual, it is obliged to act with appropriate reasons. If not, under section 706(2)(A) of the Administrative Procedure Act, those actions should be set aside by a court as arbitrary and capricious. And the arbitrary and capriciousness test of the Administrative Procedure Act has been interpreted and applied by many courts, including the Supreme Court, on numerous occasions as applying reasoned decision-making. That depends, of course, on adequate criteria on which they are based.

Third, as the Administrative Conference recommendations attached to my outline point out, agencies must pay careful attention to the process they use in applying and acting upon any program. There must be rational criteria underneath it, or else it could be an arbitrary choice of the individual bureaucrat, which may be wise, but may also be very unfair. A second criteria is that the agency’s procedure should be transparent, and there should be an opportunity to challenge the correctness of the decision before it is applied adversely to any individual. There must, in other words, be an opportunity for input and challenge, and notice and comment.

And fourth, an area of which we have given far too little attention, but I think this committee has appropriately looked quite carefully at, and that is the use of adverse publicity. Adverse publicity can be a tool for great good. When a product is out in the American marketplace which endangers public health and safety, the Food and Drug Administration, pursuant to statutory authority and procedural guidelines, is notified, gives the offending company an opportunity to explain, and then if a resolution cannot be reached in time to protect the public from adverse consequences, notice can be given.

What should not happen, however, is what happened, for example, in 1959, when the head of the Food and Drug Administration announced the week before Thanksgiving that some of the cranberry crop might have been contaminated with a pesticide, and that he was not going to eat cranberries for Thanksgiving. Essentially what he did was wipe out the crop, caused millions of dollars of loss, and ultimately Congress came to the rescue with a bill to refund or reimburse the industry for what occurred.

Adverse publicity is appropriate, but must be very carefully controlled and should be used only when there is no alternative and after the respondent has had an opportunity to come up with an alternative solution.

Applying these criteria very briefly to the programs that we are looking at today, the Trendsetter Program and the Honor Roll, I think serious questions can be raised. First of all, where is the authority for this action? Is it in specific legislation? Or if it is said to be inherent in the agency’s enforcement responsibility, how tightly connected is it? It has got to be tightly connected, or what else happens? The government agency can go ahead and decide what the law is for itself, the antithesis of the rule of law in a democratic society.

Second, there appear to be very few articulated criteria. For the Trendsetter, there are four vague criteria, which would not pass muster in a court of review. There has to be some specific stated basis for the action being taken, and particularly when an action is taken to suspend a company, identify them adversely, and have the impact of that adverse publicity proceed.

Third, the process seems to be secretive, and I see no state secrets or confidential information here. There should be an open process here subject to public input and review. The Freedom of Information Act passed by Congress in 1967 articulates a basic bedrock principle that our government should act openly. It seems to me that the Department of Labor has been operating very secretively.

Finally, I would suggest that before any action is taken that injures somebody, there should be an opportunity for notice and response.

Finally, I would note that this hearing should be aware of what I call the righteous justification that you will tend to hear in hearings of this kind, instead of focusing on the problem at hand and the procedures used, about how good and just and right our program is. And I would suggest that is a false response and that the committee should not allow any of us to give that response.

Fair process is the bedrock of democratic governance. The more abusive the process, the more likely that the agency will use its ends to justify its means. I would urge that you press the administrators to explain their process and to suggest how they can correct them.

Second, if they don't respond favorably, mandate procedures.

Third, urge those who are injured to seek judicial review, and, if necessary, provide funds that they can recover from the agency’s budget for the costs of seeking that review.

And finally, this committee ought to remember that there is always one way to correct it very quickly – cut the agency’s funding until the program meets appropriate criteria. Nothing speaks to a bureaucracy faster than cutting the funding, and it seems to me that it is a vehicle too seldom used by the Congress.

Thank you very much.

Mr. Norwood. Thank you, Professor.

Mr. Norwood. Ms. Castro, would you like to begin?

Ms. Castro. Good morning, Mr. Chairman and members of the committee. Thank you for inviting the Women’s Bureau to testify on the Working Women Count Honor Roll, a program that challenged business, nonprofits, unions and State and local governments to initiate new programs or policies that make positive workplace change in the areas that women identified in the Working Women Count survey held in 1994.

My name is Ida L. Castro. I have served as the Deputy Director for the Women’s Bureau since March of 1996. While I was not at the Bureau during the formulation of the Working Women Count Honor Roll, the program was completed during my tenure, and I welcome the opportunity to share any information I have with the committee.

The Women’s Bureau, as you know, was created by an act of Congress on June 5, 1920, to "formulate standards and policies which shall promote the welfare of wage-earning women, improve their working conditions, increase their efficiency, and advance their opportunities for profitable employment."

It is a small agency charged with a mandate to serve an ever-increasing number of customers; working women who comprised 8 million of the labor force in 1920, 62 million today, and is projected to grow to 67 million by 1999. Throughout the past 78 years, the Bureau has identified and/or created research programs and services that enable women to fully participate in the American work force. To ensure that its priorities included the current concerns of working women, in 1994 the Department of Labor Women’s Bureau conducted a nationwide survey entitled Working Women Count.

The first stage of Working Women Count was a questionnaire which asked working women what they liked about their jobs, what they did not like, and what they would like to see changed. Subsequent to OMB’s approval, we worked with 1,600 partners to disseminate the survey across the country. Partners included more than 300 businesses, 900 grassroots organizations, 75 unions, multiple daily newspapers, national magazines, and Federal agencies, in all 50 States, the Virgin Islands, Guam and Puerto Rico.

The questionnaire appeared in major women’s magazines and was distributed by associations, employers, businesses, and unions nationwide. More than 250,000 working women voluntarily responded and told the Women’s Bureau in one voice that crossed the lines of race, regions, age and income that they had three key areas of concern: Their pay and benefits were insufficient, they needed more help balancing work and family responsibilities, and they lacked respect and opportunity on the job.

A parallel scientific telephone survey of 1,200 working women nationwide indicated as well substantive agreement on these concerns.

In response to the results of the Working Women Count survey, the President directed the Secretary of Labor to make recommendations to address working women’s concerns. On April 10, 1995, President Clinton accepted the Women’s Bureau report containing recommendations on how to make work better for women. The Working Women Count Honor Roll was an integral component of our recommendation to encourage further improvements at the workplace and recognize the valuable work that women do. The Honor Roll thus became the second phase of Working Women Count.

On April 20, 1995, by means of the Federal Register, the Department of Labor invited comments on the information collection requested as required by the Paperwork Reduction Act of 1980 as amended. The Department received OMB clearance to begin the program as developed. We then notified employers of its existence through a variety of outreach efforts like mass mailings, regional events and women's organizational newsletters. Additionally, specific outreach was done to chambers of commerce and other business and professional organizations.

The process of becoming a member of the Working Women Count Honor Roll was clear and simple. Employers were asked to pledge the creation or expansion of a policy and/or program which would address the needs of working women in one of the three categories identified by the Working Women Count survey. In order to be considered, said program or policy had to be implemented after April 1, 1995. A voluntary two-step process was established to identify any and all employer participants.

First, Honor Roll applicants completed and returned a pledge card identifying the area his or her pledge would address; and, secondly, they completed an application form and sent it to the Women’s Bureau once the pledge was fulfilled. The application form was sent as part of an information kit to any organization submitting a pledge card. All employers, all employers who submitted a completed application stating that a pledge affecting one of the areas identified in the survey had been completed within the expected times frames appear in the Honor Roll report. All information submitted was available to the public.

I am pleased to report that the response to the program was greater than expected. Honor Roll employers, public and private, large and small, all across the country took concrete actions to address the workplace concerns of women. As a result, 849 organizations and employers are in the Working Women Count Honor Roll.

As one of our most successful programs, the results of the Working Women Count Honor Roll are memorialized in a report where these successes are shared with working women, employers and others nationwide to encourage replication of programs that work and foster new initiatives to ensure that women gain the pay and benefits they need, achieve the work/family balance they lack, and secure the respect and opportunity for advancement they deserve.

The Women’s Bureau is very proud of the work accomplished as a result of the Working Women Count Honor Roll.

In closing, Mr. Chairman, I would like to thank you and the subcommittee for the opportunity to speak to you today about the Department’s efforts to recognize companies that are committed to creating workplaces that are fair, that respect the many roles and responsibilities employees hold, and that value women.

Thank you very much.

Mr. Norwood. Thank you, Ms. Castro, for your informative testimony.

Mr. Norwood. Ms. Seiden, would you like to begin?

Ms. Seiden. Thank you, Mr. Chairman, for inviting the U.S. Department of Labor to testify today about the Trendsetter List, a strategy we have used to recognize companies in the garment industry that have taken steps to show their commitment to protecting the rights of the workers who sew the clothes Americans buy and wear.

I am pleased to testify for the first time before this committee this morning and would like to take note that my mother, Ethel Seiden, has come to see me testify.

While this is my first opportunity to testify, the Department has previously testified about the demographics of the industry, the scope of the compliance problems in the industry, and the Department’s recognition programs. The Department of Labor is responsible for achieving compliance with the minimum wage, overtime and child labor requirements of the Fair Labor Standards Act and several other labor laws. We began focusing on conditions in the garment industry in the late 1980s as we began to find more and more sewing shops not paying their workers minimum wage or overtime. After intervention by Wage and Hour, shops violating the law would simply close up, go out of business without paying workers the wages owed to them, and then reopen under a new name to continue their illegal pay practices. The Department’s traditional enforcement efforts were not effective protecting employees of these highly mobile contract shops.

To meet this compliance challenge, we have developed and implemented an innovative and effective strategy to bring long-term solutions to the problems confronting garment workers. Our No Sweat Initiative is a multi-prong strategy of enforcement; education to encourage and increase voluntary compliance; partnerships to involve all segments of the industry including contractors, manufacturers, retailers, consumers, and worker representatives; and recognition of exemplary steps being taken to promote or achieve compliance with the law.

The No Sweat Initiative is designed to increase compliance in the garment industry by leveraging Wage and Hour’s limited resources. Even with recent hiring, Wage and Hour has fewer than 950 investigators across the country to cover 120 million workers in 6-1/2 million workplaces. We believe our No Sweat strategic approach is the best way to increase compliance and protect workers. We are especially gratified that our No Sweat Initiative was one of the winners of the 1996 Innovations in American Government Award from the Ford Foundation and John F. Kennedy School of Government.

The focus of today’s hearing is again on the Department’s Trendsetter List, developed as part of our recognition prong. Many manufacturers and retailers urge us to not just highlight the bad actors in the industry, but to find ways to acknowledge those companies that were taking extra steps to increase compliance. The Trendsetter List was intended to advance voluntary compliance with the law by recognizing companies whose efforts could help to increase compliance with worker protection laws. The list was rooted in the firm belief that most companies do want to comply with workplace laws and that their commitment is essential to ensure that a worker’s rights and opportunities are respected.

By highlighting those companies with exemplary workplace practices and the meaningful steps they were taking to ensure that their goods, products and services are not the result of abusive workplace conditions, we applaud them for their efforts and accomplishments and hold them up for others to emulate.

The Trendsetter List began in 1995 under Secretary of Labor Robert Reich and included companies that pledged to combat sweatshops and that had implemented policies designed to achieve that goal.

To create the list in 1995, the Department undertook an outreach effort to inform the industry of the objectives of the list and to invite firms which wished to be included to submit information supporting their designation as Trendsetters. The Department contacted almost 80 of the top industry firms directly and reached out to other firms through trade associations such as the National Retail Federation and the American Apparel Manufacturers Association and through trade press such as the Women’s Wear Daily. These outreach efforts were repeated and expanded in 1996 to update the list. Firms were also free to submit materials at other times during the year, and those submissions were reviewed periodically.

The Department reviewed the submitted information on the basis of four criteria: First, demonstrate a commitment to labor laws; second, cooperate with law enforcement officials when contractors or suppliers are found in violation of the FLSA; third, educate suppliers on the requirements of the FLSA; and 4, monitor working conditions at suppliers’ work sites.

Over 34 companies have been recognized on the Trendsetter List, representing over 130 apparel lines and thousands of retail stores.

The last additions to the Trendsetter List occurred in March of 1997, when three additional companies were named as Trendsetters. Since that time the list has remained dormant, in light of the work of the Apparel Industry Partnership.

As you may be aware, the Apparel Industry Partnership, a voluntary, industry-driven partnership of manufacturers, retailers, labor, nongovernmental organizations and consumer groups was formed 2 years ago to develop strategies to address the problems of sweatshops.

Last year, the Department decided not to solicit new Trendsetters and to allow the list to remain dormant, anticipating the work of the Apparel Industry Partnership would provide a more effective vehicle for recognizing companies that take affirmative steps to end worker abuse in the garment industry. Once the partnership has completed its work, the Trendsetter List will be obsolete. The Department plans to take no steps to update or modify the Trendsetter List.

In closing, I would like to again thank the subcommittee for this opportunity to describe the Department’s efforts to recognize apparel companies that are committed to promoting and achieving compliance with the FLSA and, like the Department of Labor, are committed to fostering the well-being of their employees.

For better or worse, the companies that violate the law and abuse their workers often capture the headlines. The vast majority of businesses that try to do the right thing – and succeed – go unheralded. The Department is proud of its role in trying to shine a spotlight on some of those companies to applaud them for their efforts and to help them to lead their other colleagues by their example.

Thank you, and I would be happy to answer any of your questions.

Mr. Norwood. Thank you, Ms. Seiden, you did very well, and I bet your mama is very proud of you.

Mr. Norwood. We are going to have to recess just for a minute to go get this vote done, and we will come immediately right back. Just stretch your legs a little bit, and we will be right back.

[Recess.]

Mr. Norwood. Thank you for waiting on us. I am sorry we had the delay. I would like to thank each of you for your insightful testimony, and the subcommittee is very grateful for your time and energy in all of this.

Ms. Seiden, you told my staff during an interview that several senior staff sat around and made the decisions about who made the Trendsetter List and who may have been placed on probation. Mr. Fraser confirmed this at our May 8th hearing, and we have since learned that these meetings were held in November and December of 1995, January and November of 1996, and January and March and November of 1997. Is that correct? Do we have the right dates?

Ms. Seiden. To the best of our recollection.

Mr. Norwood. But you are not able to give us exact dates?

Ms. Seiden. No, sir.

Mr. Norwood. Those are pretty close, and you think they are right?

Ms. Seiden. Yes.

Mr. Norwood. You attended all of these meetings?

Ms. Seiden. Yes, sir.

Mr. Norwood. That’s correct. Other participants included policy specialists from the Office of the Assistant Secretary for Policy, Stephanie Swirsky. Is that right?

Ms. Seiden. Swirsky, that is correct.

Mr. Norwood. And Todd Howe and Michaela Meehan.

Ms. Seiden. Meehan?

Mr. Norwood. From the International Labor Affairs Bureau. Is that correct information?

Ms. Seiden. Yes, at various times they were assigned, as the rest of us were, to participate with this group.

Mr. Norwood. No other individuals attended these meetings, to your knowledge? Is that correct?

Ms. Seiden. That is correct. We received advice from counsel, but those were the staff that was assigned to participate in this and to evaluate the information sent by the particular companies against the criteria. That is correct.

Mr. Norwood. But you had no written agenda for these meetings; is that correct?

Ms. Seiden. It is correct that we did not have a written agenda. The purpose of the meetings were to evaluate the information that was submitted by the companies. They were free to submit any information they wished, against the criteria that we had and to review that material.

Mr. Norwood. And I think I am correct when you told our staff that no minutes or written notes were kept of the subject matter discussed during these meetings; is that correct.

Ms. Seiden. No minutes were kept, that is correct.

Mr. Norwood. Or written notes? I can’t believe you wouldn’t be taking notes during that thing.

Ms. Seiden. I don’t recall the question that counsel asked me during the staff interview. In terms of notes taken, I don’t recall what notes I took at the particular time or when and if I discarded those notes.

Mr. Norwood. I guess that’s why it’s pretty hard to tell us the exact dates of these meetings.

Ms. Seiden. That is correct. I didn’t have it on a particular calendar in my computer system. I think, for the purposes of trying to give you our best recollection, since the letters from Secretary Reich went out in the beginning of November of ‘95 and the list was published in I believe it was December of ‘95, I think it was fair to say that during that time, that was when the meetings were occurring, in that particular year. And in 1996, the list again was issued in November of 1996, so I believe it was also during that time that that’s when the meetings would have been held. That was my best recollection.

Mr. Norwood. If there was no agenda about these meetings, how did the participants of these meetings know how to be prepared for the meetings? What were the issues that would be discussed? Did, for example, you communicate by e-mail or memoranda before these meetings?

Ms. Seiden. No, sir, I didn’t communicate by e-mail or memorandum before these meetings. The purpose that was assigned to this particular group was to evaluate the information that we received from companies against the criteria that we had and determine whether or not they were exemplary companies to be recognized as Trendsetters.

Mr. Norwood. How did you know that was the purpose of the meeting?

Ms. Seiden. Well, the purpose, because in 1995, the Secretary asked us to come up with a recognition program in response to criticism from the industry that we were only focusing on those companies that were violating the minimum wage and overtime laws. And that we should be praising companies that were trying to do the right thing. The Secretary of Labor asked us to come up with a recognition program that would create models for other companies to emulate. And in coming up with that process, that was our goal.

Mr. Norwood. I don’t want to belabor this, but there were four people in the meeting. Somehow or another, somebody had to call the meeting and say, this is what is on the agenda for the day, we need to discuss these things, here is what we are going to spend our time doing. Were telephone logs kept, or was all this discussed over the telephone in order to determine what you were going to do once you went into the meeting that day?

Ms. Seiden. It wasn’t discussed over the telephone, and there weren’t four people, there weren’t two people. I just wanted to let you know, from the International Labor Affairs Bureau, there weren’t two people at one time from the International Labor Affairs Bureau, there were different representatives. I just wanted to make sure that you didn’t misunderstand that. The agenda was to, whether it was the first one, was to decide which companies were exemplary to be on the Trendsetter List.

Mr. Norwood. Did everybody just sort of know that? Or did somebody take the lead and say, I am having a meeting in this office, here is what we are going to talk about, who is going to be on the Trendsetter List. And if so, did you inform each other by telephone, e-mail, note, memorandum? How did you get together if nobody talked to anybody?

Ms. Seiden. Well, I think meetings were scheduled; either we got together over a time or somebody’s secretary called together the meeting. I can’t recollect how a particular meeting was called or which person called a meeting. We had a job to do, and we got together and did our work.

Mr. Norwood. Now the job is admirable. This is to determine, perhaps, who good guys are. But by inference, if you aren’t a good guy, you are a bad guy, and that then is what this hearing is all about. It isn’t that we don’t want to determine who the good guys are, it’s how this process goes.

Dr. Gellhorn, how do you feel about this? What is your response to Ms. Seiden’s recollection of the events surrounding the Trendsetter List?

Mr. Gellhorn. The problem I have in listening to this is what I feel is a total disconnect between what the problem is and their solution. As I understood Ms. Seiden’s testimony, the concern was that the Labor Department would pursue those who were in violation of the wage and hour laws, and they would set up a new shop under a new name.

Putting out a Trendsetter List does not go after the fly-by-night operators. They are certainly not going to be affected by the fact they are not on the good guys list, and this is not a unique problem. We have got the same problem in the consumer fraud area, you have it also in the securities and exchange area, and both those agencies have specific authority from Congress to address the problem.

What the Congress did was give the agencies authority to go into district court to pursue these companies who are in violation, and get not only the companies that are in violation, but get the order to go after the individuals. So when they reset up your shop, you not only can put them out of business, but you can put the individuals in jail if necessary.

It seems to me that kind of a program might make sense, if the concern is, as Ms. Seiden suggests, that we want to discourage those companies from ignoring the law. I don’t think it makes sense to go out and try and get people to not only comply with the law, but to comply with the Secretary of Labor’s ideas of what the law ought to be. The process that is being described is sort of, I guess, what I would say an inefficient and clumsy bureaucracy, which doesn’t have an agenda, which has no criteria, which announces decisions, and which says afterwards, we can’t recall.

This is not the way either a good business or a good government ought to operate.

Mr. Norwood. I see my time is up. Mrs. Mink, I certainly went over a little, and I will be glad to do the same for you.

Mrs. Mink. Thank you. I appreciate it.

I would like to take my first 5 minutes on the testimony from Ida Castro, with regard to the Working Women Honor Roll. Now, judging the testimony that was presented upon the criteria which was established and the testimony of Dr. Gellhorn, I wanted to note that there is statutory authority given to this particular agency to formulate standards and policies. There was a procedure developed in which there was wide opportunity for input, notice and response. The survey indicated that 1,600 partners, including 300 businesses and 900 grass-roots organizations, participated in the survey in which 250,000 women voluntarily responded. Out of which a report was put together and published in the Federal Register, which goes to the question of adequate notice to the public and opportunity for response given through the publication in the Federal Register. And then out of that came the production of the Honor Roll, which listed 849 employers.

My question to you, Dr. Gellhorn, is based upon the information provided by Ms. Castro, wouldn’t you say that your points were fully met by the institution of this Honor Roll by the women’s agency?

Mr. Gellhorn. Had they stopped with the report that summarized the findings of the questionnaire and identified questions that had been asked and the responses they received and drew inferences and conclusions from it. I agree with you, it would seem to me that the process is perfectly adequate; the authority was there.

The problem was a different one, and the problem is the one we find most common in government, and that is they didn’t stop at the end of their authority. They went ahead then and identified those who should be on an honor roll and in some cases dropped people. That is not in the statutory authority. If you look at the statutory authority, there is no authority to establish an honor roll, to identify individuals, and there is no process set for an individual to protect their interest in being dropped.

Mrs. Mink. Dr. Gellhorn, I am somewhat concerned by your observation, because I consider some of the programs that the government participates in, where they single out exemplary performance, as probably some of the best things that the government does. For instance, in the Small Business Administration, we have occasion each year to welcome outstanding small-business people that have created businesses out of whole cloth and been able to employ people in new ventures. I think that that is a truly worthwhile activity of the government, although maybe there really is no statutory justification for doing that. But it seems to me that our world is so full of bitter news and savagery and so forth that it is important for government to assume the responsibility of singling out outstanding performance.

That doesn’t mean that everybody else who didn’t get an award was a bad performer. But I think the effort of saying, here is exemplary performance in our society, and we feel it noteworthy to help stimulate and serve as an incentive. The establishment of an honor roll. We do that in our elementary, secondary schools. We post in public view an honor roll of students who have done exemplary work. That doesn’t mean everybody else is a bad performer, but it is an incentive; oh, Mom, I made the honor roll. I mean, that is the nature of how we try to encourage people to do better or to follow standards.

If you agree the report that was published in the Federal Register was appropriate because it set certain criteria, then it seems to me that you’re only inches away from the step which was taken by the women’s agency, and that is to say to all the people, okay, submit your entries, and out of that they selected not one or two, but 849 employers. So I find it very difficult to understand how what the Women’s Bureau did can have any real substantial criticism, and you look like you want to say something.

Mr. Gellhorn. A brief response. If you look at the last two paragraphs of my outline, they agree with what you are saying in terms of award programs. I don’t have any trouble with an award program, except for one other point. I am not certain I want my tax dollars being spent in this area because I frankly think it is frivolous and doesn’t accomplish anything. But if it makes some people happy, I don’t have a procedural objection, and that is not the objection I stated.

The objection I stated is when they don’t stop with identifying those who are doing meritorious work, and, in addition, take names off and identify the names they are taking off, it’s that kind of activity which injures people, and in our democratic society it ought not to be done without a fair process.

Mrs. Mink. One final question of Ms. Castro. Did you take any names off?

Ms. Castro. Absolutely not. The process for the Working Women Count Honor Roll is really a very different process. We made no selections. The employers selected themselves by deciding whether or not they would participate. We did not direct the employers to do anything in particular, other than commit to address the three areas the women expressed. The employers decided what, if anything, they would do, and we reviewed the applications for completeness, and if completed, they were placed on the Honor Roll. No one was denied. Any employer, any organization that completed the application, appears on the Honor Roll. We made no denials, no rejections.

Mrs. Mink. Thank you, Mr. Chairman.

Mr. Norwood. Mr. Hoekstra.

Mr. Hoekstra. Recognizing that the Chairman of the subcommittee has another committee in a few minutes, I will yield my time to the Chairman.

Mr. Norwood. Thank you very much, Mr. Hoekstra. I appreciate that.

In order for us to continue our train of thought, Ms. Seiden, I am going to go back to you, but, remember, jump in. I mean, we are trying to have a discussion here and get to the bottom of this. It is troubling to us that nobody knows what happened in a closed door when four people met, and that is what I am trying to get at.

Did you or any of the other participants in the meetings talk by telephone with any other parties regarding the issues or other matters to be discussed in advance of the meetings? Did you talk to anyone else? Did the four of you who met in this closed room talk to – we are trying to find out if anybody, anywhere, knows anything about how you guys came to your conclusions?

Ms. Seiden. Well, absolutely. We talked with a lot of people. We did broad outreach in terms of notifying the industry of our criteria. We sent letters to individual companies, we sent letters to associations. We talked with the associations.

Mr. Norwood. This is after you completed your work?

Ms. Seiden. No, this was before.

Mr. Norwood. During the process of these meetings?

Ms. Seiden. This is during the process, with the criteria. We talked with manufacturers and retailers and to their associations to ask them to spread the word and to communicate what we were doing. We reached out through the media to the trade press that the industry reads every day, the Women’s Wear Daily. We put it on the Internet. We talked about it with reporters. We did that. If people called and asked us about it, we talked with them.

Mr. Norwood. Let me try to do it this way. Once you started a meeting, how do you proceed in a meeting without an agenda? And maybe it will help me and help the committee to understand. Just give us an example of how you conducted your meeting. Tell us as much in detail as you possibly can about what was talked about when we decided who was good and who was bad. Let’s pick one out. November of 1996, how did this work?

Ms. Seiden. Well, first, Mr. Norwood, we did not decide who was good and who was bad. That was not the purpose of the meetings, and it was not the purpose of the program. The purpose of the program was to hold up companies as models, as exemplary employers for the industry to take note of and emulate their practices and have other places to go to find out the best practices of what companies were doing. In no way was this program used as a way to highlight, as you referred to it, as bad guys. And in fact, none of the companies who were not selected as Trendsetters were highlighted in any public way as bad guys, and their names were not released publicly as bad guys. That was not the purpose of this.

Mr. Norwood. Professor Gellhorn.

Mr. Gellhorn. If you look at the Web site of the Department of Labor, and I have a printout here dated the 6th of March, 1998, if you look at page 4 of the Web site, here is what it says about one company. I am not going to identify the company, but I will identify what is said: X is on probation. The U.S. Department of Labor has concluded that X’s monitoring program is ineffective and will review the company’s monitoring program within 60 days to determine X’s future status as a Trendsetter.

Now, I think that directly contradicts the testimony you have received, and at least I think most of us would read that official U.S. Web site as condemning that company, or at least putting them on probation. And I would suggest under the Administrative Procedure Act, that’s a sanction. And a sanction is one that ought not to be imposed by government without notice and an opportunity to that company to have been heard. And I didn’t hear, from the testimony that they had an opportunity for a hearing and to respond.

Mr. Norwood. And maybe they did need to be sanctioned, which is the reason this process must be in the open light.

Ms. Seiden, I have several letters regarding placement of Trendsetters on probation. Specifically, I have a letter to you from the law firm of Rothner, Segall, Bahan & Greenstone. It is written on behalf of the UNITE Union. It reads and I quote, "UNITE believes it would be entirely inappropriate for the Department to continue to endorse Guess by including the firm on its Trendsetters List. We urge the Department to delete the firm." [end quote.] The letter is dated November 20, 1996.

I have a second letter to the honorable Robert Reich from the Jewish Labor Committee. It reads, and I quote, "We urge the Department not to include the company Guess on its upcoming Trendsetters List." [end quote.] This letter is dated November 22, 1996.

I have a third letter, dated November the 26, 1996, the day before Christmas rush season for retailing. The letter begins, from you, Ms. Seiden, to Mr. Weinman, General Counsel, Guess Jeans, and it reads, and I quote, "The Department is instituting a probationary period for Guess." [end quote.]

The timing of this is very coincidental and clearly very damaging to Guess. Now maybe Guess should have been there, but I want to point out to you, again, the problem is who determines this? Who calls who to get somebody off the list? Maybe somebody called who is in competition with Guess. Maybe somebody called from the union who is mad at Guess.

That’s why all of this is so critical. What you have done in these closed door meetings, that is opened up to the sunlight, and that is what has got to change. And I agree with Dr. Gellhorn that, clearly, the law has not been followed clearly when you had closed-door meetings.

With that, my time is up. Bobby, do you want 5 minutes?

Mr. Scott. Thank you, Mr. Chairman.

Mr. Norwood. Bobby, if I may. Let me make the record clear. I know Ms. Mink asked me to do this, she wants me to. The TV rules referred to earlier in the rule book were repealed in October of 1997, and it is up to the Chairman to have proper order and decorum, and this Chairman felt we did have proper order and decorum.

Thank you, Bobby.

Mr. Scott. Thank you, Mr. Chairman, and I was not here during that period of time, so I cannot comment, and I think it is probably just as well.

Ms. Seiden, as I understand it, you are using the industry to determine recognition standards at this time. You are not using the Trendsetter Program anymore? Is that what I understand?

Ms. Seiden. What I said is the list is currently dormant, and we have been awaiting the work of the apparel industry partnership to take that role over and take over the recognition component. We don’t have any plans to update the list at this time.

Mr. Scott. And if you were to go through something like this again, would you do it more like the Women’s Bureau than you did at this time? Or you don’t have any plans?

Ms. Seiden. We don’t have any plans to do that again. So we haven’t addressed that.

Mr. Scott. Ms. Castro, as I understand it, there are no complaints about the way you did your recognition program?

Ms. Castro. Indeed, all we have received are accolades. No complaints whatsoever.

Mr. Scott. So we have one with no complaints and one where you have changed your process so that industry is doing it.

Well, while you are and here and I have time, let me ask another question. Ms. Seiden, what else are you doing to enforce wage and hour violations, and what are barriers to more vigorous enforcement?

Ms. Seiden. Well, as I earlier stated in my testimony, we have used a multi-prong approach to try to increase compliance in the garment industry, and enforcement alone can’t accomplish that. So we are using enforcement, education of the employers, and education of the contract shops and of the industry. We are using partnerships. We are trying to work with the industry and consumer groups to increase awareness and increase compliance in our work with the apparel industry partnership, and we are also trying to recognize those companies that are trying to do the right thing. We believe all of those are critical to increase compliance.

What is extremely important in this particular effort was to show the positive side of the industry. That is what the industry asked us to do. They said to us, we are tired of having our name tarnished in the press. You need to recognize those companies that are trying to do the right thing, and we did this in response to that request.

Mr. Scott. Well, since you have gotten our attention, are there any things we need to be doing as legislators to make the enforcement more effective?

Ms. Seiden. I am not sure I am in a position to comment on what you all can do. I am sure you all can come up with a very good list, and we would be pleased to hear your ideas and be pleased to have any other tools that you might want to give us to use to increase compliance.

Mr. Scott. Well, Mr. Chairman, if it’s appropriate, we would like to leave the record open for the Department, if they have recommendations, to let us know what kinds of things we can be doing.

Mr. Hoekstra. [Presiding.] Without objection.

[No recommendations were received]

Mr. Scott. Ms. Castro, can you tell us the status of the glass ceiling and the wage gap, and what you are doing, and what we may do to eliminate the glass ceiling and close the wage gap?

Ms. Castro. In 5 minutes?

Mr. Scott. In what is left of the 5 minutes.

Ms. Castro. Well, the glass ceiling and glass ceiling concerns, regrettably, still exist. Women are basically about 5 percent of the top senior positions in the private sector. It is still an issue and a problem.

The wage gap, in terms of wages between men and women, still exist. We just commemorated the 35th anniversary of the Equal Pay Act this past June 10th at the White House. Much data was shared during this event, and, basically, what it shows is that although the gap has been somewhat persistent, in the first quarter of this year it had increased to about 76 cents to the dollar. There are many reasons why a wage gap…

Mr. Scott. Did you say it increased?

Ms. Castro. I'm sorry, the proportion of women’s share increased. The gap narrowed. You are absolutely right. Thanks for correcting me. There are many reasons why this gap may exist. However, a report of the Council of Economic Advisors basically led to the conclusion that when you factor out experience, you factor education, you factor seniority, you factor all of the normal work factors, there still remains a significant gap that is unexplained by any other work-related factor and can only be attributed to gender, so that there are many issues that concern us regarding that.

We need to look into providing opportunities for women in all occupations, to make sure that they are not just in female-occupied positions which tend to have lower wages and depressed wages. So there are many challenges presented by way of education and training and by way of exposing women to the variety of occupations that may enable them to sustain livable wages and progress at the workplace.

Mr. Scott. What is the status of the glass ceiling?

Ms. Castro. As in the commission?

Mr. Scott. Well, as in the idea that women can get up to a certain level and then get stymied.

Ms. Castro. Well, the status is that, regrettably, it is alive and well. There are many situations where women feel and know that they have reached the peak and that that peak, that ceiling, for them is lower than that of the rest of the employers. Catalyst just issued a survey that they conducted, and they found that 30 percent of the senior executives, for example, that have left the private corporate world to establish their own business have done so because they felt they could not progress any further within the corporate structure.

Let me say this. There are many corporations that realize this and that are, in fact, on their own, moving forward to prevent these glass ceilings and indeed shatter them. They understand that their competitive opportunities within the global market really, really depend on their ability to attract and retain the best possible talent, regardless of gender and other factors. So that I commend many, many corporations that are at the forefront of this situation. I happen to think that most corporations, if they understand exactly how to address and tackle this issue, they will, in fact, do the right thing.

So there is much to do by way of education and outreach to help employers also have that competitive edge and retain their opportunities within the business world as well.

Mr. Hoekstra. Mr. Ballenger.

Mr. Ballenger. Thank you, Mr. Chairman.

Ms. Castro, I want to get back to your Women’s Bureau Honor Roll. I have before me a copy of a publication, the Daily Labor Report, from June the 6th, 1997. It states, Vice President Gore announced the list of 400 entities being added to the Honor Roll that day, bringing the total to 850. Further, it states that some 1,300 companies, of which the 850 were selected, with the Vice President awarding certificates to some of these companies, and thereafter the new listees were added to it and remain posted at taxpayers’ expense on the Department's Web site. Is that correct?

Ms. Castro. Partially. Let me say this. What happened was there were two reports done on the Honor Roll list. One was an interim report that was issued in June of 1996. The June of 1997 report was a final report. When there is a reference between the 1,300 and the ultimate 849, the 1,300 number refers to the amount of pledges that the Women’s Bureau received.

Mr. Ballenger. A pledge is what?

Ms. Castro. That is where I am going. There was a two-step process established in order to process the Honor Roll list. The first step was at the beginning of the program, when we disseminated all of the information with the criteria on how to apply, and employers and organizations sent to us a pledge. In other words, they were telling us that post-April 1st, ‘94, they were pledging to do something, whatever it was that they decided to do, that would affect the employees, within whatever amount of employees they had, and that would address the three areas of concern expressed.

Mr. Ballenger. I understand what you are saying, but you are going to blow my 5 minutes.

Ms. Castro. Oh, my minutes count against yours? I’m really sorry then. Let me go quickly.

So the pledge was notice that we intend to do something. Application review was notice that we, in fact, did it. So there was a difference between those that pledged to do something and those that actually told us they did it.

Mr. Ballenger. Did all those that said they did it get selected?

Ms. Castro. They all appear in the Honor Roll, yes, sir.

Mr. Ballenger. And for those that did not appear on the Honor Roll, did they get an explanation back as to why they didn’t get on?

Ms. Castro. Those that do not appear on the Honor Roll are those that did not tell us that they did anything. We contacted them. We offered them ample opportunity to fill out the application. We have no idea why they chose not to fill it out. It was their option.

Mr. Ballenger. Is there any way you could say, look, I didn’t get your mail, or some U.S. department didn’t deliver this and so forth, I would like the opportunity to appeal your decision?

Ms. Castro. If that had occurred, we would have offered ample opportunity. Indeed, the pledges that came in after the cutoff, we provided the application and allowed the employer to fill out anyway. So our report actually was delayed somewhat in printing because we gave everyone ample opportunity to send in the information.

Mr. Ballenger. Before we use up all my time, Dr. Gellhorn, you seem to be knowledgeable of what she is talking about.

Mr. Gellhorn. Well, there is nothing wrong with that process that they did, except for one thing. It sounds to me like a total waste of money, because what we are having here, you get on the list because you say you want to get on the list. You are not on the list if you don’t send in the second mailing. So what does the list prove? The list proves that 850 companies know how to send in, one, a postcard and, two, a follow-up letter, and the government trumpets that with discussions in the Rose Garden and lots of publicity.

I don’t think anybody is being hurt. There is no administrative process being abused, except for one thing, a colossal waste of time and money, and I guess I would urge the committee to think about closing it down, and if the Women’s Bureau has nothing better to do, it ought to close down. There is nothing wrong with education, there is nothing wrong with explaining what the laws are and encouraging self-compliance, nothing wrong with urging self-regulatory programs, but to spend my tax dollars on this kind of a project year after year, it seems to me, is accomplishing nothing.

Mr. Ballenger. Is this a continuing program?

Mr. Gellhorn. Pardon?

Mr. Ballenger. Is this is a continuing program?

Ms. Castro. There are several things I would like to address that were stated, because I think that they are really erroneous.

Mr. Ballenger. Well, answer my first question. Is it continuous?

Ms. Castro. No, it is not continuous, that’s number one. It has been over since the final report was issued. And the key is that 2 million people benefited from this program.

Mr. Ballenger. Whoever, I don’t know. But basically I am just trying to think, especially considering the Guess situation, and that is different, I guess that was Ms. Seiden’s situation. Obviously they were not unionized. Would that not be true?

Ms. Seiden. We don’t make our decisions based on whether a company is unionized or not.

Mr. Ballenger. Even if the union happens to send you the information about the company?

Ms. Seiden. We accepted information from anybody who wanted to provide us with information. We didn’t solicit information from people, but the associations provided us with information, and other groups provided us with information.

Mr. Ballenger. Let me ask you a question. Monitor working conditions at the suppliers’ work sites; how in the world would you do that? Mr. Chairman, everybody else had a long 5 minutes. How would you monitor working conditions at a supplier's work site?

Ms. Seiden. That was up to a particular company. Some companies had internal monitoring programs where they would send compliance officers to the shops.

Mr. Ballenger. If they didn’t have that, and that is one of the preconditions that they have to have…

Ms. Seiden. Yes, that was one of the criteria.

Mr. Ballenger. If they didn’t have this group that you are saying go inspect, how would they do it?

Ms. Seiden. Some companies hired external monitors to do their work. Other retailers required their manufacturers to do a monitoring program.

Mr. Ballenger. Was this before or after Kathie Lee?

Ms. Seiden. I would have to check the dates on when Kathie Lee -- where her monitoring -- she and her shops, I think, have been in the newspapers.

Mr. Ballenger. I have been serving the Texas leadership for 30 years, and I know a good shop and a sweatshop and all of this other stuff, and I watched after Kathie Lee and the big deal hit in Honduras. If the country’s law is different than your criteria, does that preclude anybody from being included?

Ms. Seiden. We didn’t include a particular company’s criteria for inclusion on the list. We took what the company said that they were doing, whether domestically or internationally, at face value. We accepted them at their word.

Mr. Ballenger. It says, demonstrate commitment to labor laws. Whose labor laws?

Ms. Seiden. Labor laws in the United States. It is easier for us to know that information. And internationally companies submitted information to us. Many companies have a code of conduct.

Mr. Ballenger. I realize all of that. But if a country’s law is different than our law…

Ms. Seiden. We did not examine different countries’ laws. We just examined and reviewed the information that the companies provided to us as to what steps they were taking to demonstrate a commitment to labor laws both here and abroad.

Mr. Ballenger. Thank you, Mr. Chairman.

Mr. Hoekstra. Mr. Gellhorn, I understand that you need to leave relatively soon. Back on September 15, 1996, you wrote an article entitled, The Mother of All Benefits. Just very briefly, what does that mean?

Mr. Gellhorn. I’m sorry, the what?

Mr. Hoekstra. Actually, you were quoted in an article.

Mr. Gellhorn. I have no idea what they quoted.

Mr. Hoekstra. Do you believe there is a benefit for being on or off a list?

Mr. Gellhorn. Okay. In the early ‘70s I wrote an article on adverse publicity, and one of the things that we looked at and this was a study for the administrative conference and one of the things that we looked at was what is a sanction by government. Government can impose a sanction by inclusion or exclusion. So it seems to me if one is taken off a list, particularly if there is notice, or if others know about it, that can be a sanction. How serious depends on the particular situation.

Mr. Hoekstra. Ms. Castro, you indicated that the Women’s Honor Roll stopped when, when the report came out?

Ms. Castro. The final report.

Mr. Hoekstra. Which was when?

Ms. Castro. I believe June or August of 1997.

Mr. Hoekstra. April 27 of this year the President spotlighted 40 companies for model practices. The President said that these companies were taken from the Women’s Bureau Honor Roll. Did your office prepare the report?

Ms. Castro. What was the date?

Mr. Hoekstra. April 27 of this year.

Ms. Castro. That might have been from our report. I don’t have the context of that, so I’m not sure for which purpose it was done.

Mr. Hoekstra. The President personally released a report on April 27 of this year that spotlighted 40 companies for model practices. The President said these companies were taken from the Women’s Bureau Honor Roll. Did your office prepare that report?

Ms. Castro. We might have. Was it the child care? We have done several reports in the last month. I think that is the child care report, yeah.

Mr. Hoekstra. This is another list, then, where…

Ms. Castro. It is not another list. If we prepared it, it would have been from the 849 list.

Mr. Hoekstra. Okay. If it is not a list, how did you pick the 40?

Ms. Castro. If it was an inquiry from the White House regarding child care, we would have reviewed our list and picked out those that were clearly child-care-related activities. The list composes, as you may recall, when the Honor Roll was created and the pledges were submitted by employers, they could choose to address whichever area they wanted. Not all 849 addressed issues concerning child care, so that if we get a question on child care, we submit those individuals on the list that did something regarding child care.

Mr. Hoekstra. And do you feel that there is some integrity to these 40 perhaps getting that kind of recognition from the President?

Ms. Castro. That would be the President’s decision. I offered the list. It is what it is. It represents what it represents. It is 40 companies that chose to do something in a given period of time regarding child care.

Mr. Hoekstra. I am nervous about the criteria and how you get to be one of the 40 and how you get to be the 41st one that doesn’t get chosen, which gets me back to Ms. Seiden.

When you are talking about the Trendsetters List and that perhaps one of the criteria was their monitoring of suppliers meeting labor law? Is that correct?

Ms. Seiden. Monitoring their suppliers for compliance with labor laws.

Mr. Hoekstra. Is that part of the law?

Ms. Seiden. Monitoring per se is not part of the law, but…

Mr. Hoekstra. Not per se. Is it a responsibility of a company to monitor their suppliers for compliance to labor law?

Ms. Seiden. It is the responsibility of companies to pay the right wages.

Mr. Hoekstra. No, no.

Ms. Seiden. I’m trying to respond to your question.

Mr. Hoekstra. If I am company A, and Ms. Mink is supplying me with components for whatever I am building. Is it my responsibility to go to Ms. Mink and make sure that she is meeting Fair Labor Standards Act and OSHA? Is it my responsibility to make sure that she is doing that, yes or no?

Ms. Seiden. The answer is yes, because, would you like to let me finish?

Mr. Hoekstra. Where in labor law does it say that it is my job to…

Ms. Seiden. I am trying to respond to your question.

Mr. Hoekstra. I want specificity where in labor law. This is a much different understanding of labor law than I have.

Ms. Seiden. The goods that Mrs. Mink is making for you, if they are not made in compliance with the law, whether it is goods made in a sewing shop, if they are not made in compliance with the law, then they are "hot goods." That is Fair Labor Standards Act. You would be receiving goods in violation of that particular law.

Monitoring is a tool to ensure your protection from the receipt of hot goods. So, in effect, Mrs. Mink has the obligation to comply with the minimum wage and overtime laws. The use of monitoring is one of the tools that you can use or require Mrs. Mink to have to ensure that you are not going to be receiving hot goods in violation of the law.

Mrs. Mink. Mr. Chairman, since my name has been used…

Mr. Hoekstra. Yes. I am kind of thinking about this, so go ahead and take the remainder of my time.

Mrs. Mink. Thank you. It is like goods that are stolen, and unbeknownst to you, you have come into possession of it. Those are "hot goods," and if you sold them or profited from them, you are as guilty as the person who stole it in the first place.

And so Congress in its wisdom passed a law with reference to "hot goods," so surely the Department has as its major responsibility the enforcement of this "hot goods" provision which carries with it a responsibility to the manufacturer.

If the Chairman would only listen, he might see the point here under our bill that we put in H.R. 25 which tries to emphasize the importance of a manufacturer's' role in all of this. They can't stand aside and send their work out to different marketers to produce the stuff for them and say, oh, we don't know how they were made. We don't know whether Fair Labor Standards Act was complied with.

Under the law that Congress passed, which is part of our oversight responsibility to see that it is being complied with by the Department and others, it says manufacturers cannot move goods unless it complies with Fair Labor Standards Act.

So the Department is clearly within its legal authority, which, we were reminded by Dr. Gellhorn, has to always be there, and I can't see any reason for the Department not performing. This is one of their major areas of responsibility.

Well, the manufacturers have not felt happy about this "hot goods" provision. They don't want to be fingered for not having complied, so they have gone into extraordinary measures to try to do voluntary compliance, and they are the ones that say, okay, you are always pinpointing the ones in our industry who have been the bad guys. Do something now and show that there is compliance among those of us who do follow the law, and that is how this Trendsetter thing started at the behest of the industry.

It is like saying, hey, there are some of us that are good; pick out the role models. People are always coming to me and saying, "You are a great role model." I am sure that they do that to you, Mr. Chairman. It is part of the nature of our society to look around for the good guys.

So I find the whole testimony today very unremarkable and find nothing wrong with the Department. They are trying to do their job to enforce the law, and I thank you for yielding to me.

Mr. Hoekstra. You are on your time if you want to ask any more questions.

Mrs. Mink. Ms. Seiden, when you find someone violating the law, not complying with the Fair Labor Standards Act and so forth, do you publish this violators list while the matter is under investigation? Do you put it out on a bulletin board? How does the industry get word of these violators that have been called to your attention?

Ms. Seiden. We don’t publish a bulletin while we are undertaking our investigative work. However, each quarter we publish a list of contractors and the manufacturers that are working with those contractors that we have found in violation of the Fair Labor Standards Act, and that is published quarterly, and that is on the Internet. We are about to publish another one at the beginning of next week.

Mrs. Mink. Is there statutory authority for indicating violators?

Ms. Seiden. We think that we have statutory authority in our daily authority to administer and enforce the Fair Labor Standards Act.

Mrs. Mink. In fact, that is your precise authorization under the law is to enforce the law that Congress passes?

Ms. Seiden. Yes, that’s correct.

Mrs. Mink. Is this described in your regulations, how you go about handling these violations that come to your attention?

Ms. Seiden. Well, we believe education, for instance, and educating the public about what we are doing, on which we spend about 20 percent of our time, is critical in terms of administering the Fair Labor Standards Act on a daily basis.

Mrs. Mink. So with these publications and the listing of the violations which you put into this quarterly report is why industry came, talked to the Secretary, saying, you have all this information out there in the public sector with reference to violations, it is time for the Department to turn the leaf and start talking about the people who are not violators? Isn’t that how the Trendsetter got started, at the behest of the industry and not something that you cooked up?

Ms. Seiden. The industry was the inspiration for the Trendsetter List. It was on the wake of El Monte in 1995 when many retailers felt that their name was unfairly tarnished because goods were produced in slave-like conditions in El Monte, California. Secretary Reich had a summit with the top retailers in September of 1995 to try to work on changing the…

Mrs. Mink. Was there a report with reference to that meeting?

Ms. Seiden. I don’t believe there was a report, but it was certainly at that meeting where the retailers were very concerned about their image being hurt.

Mrs. Mink. Did the retailers produce a summary or report or newsletter outlining the conference or summit that they attended?

Ms. Seiden. I am not sure. There might be a press release or some other information that we could locate, but it was during dialogues like that with the industry where the industry was concerned about the unwanted criticism being leveled and a whole industry having a black eye because of what they perceived as problems with a few, a few of their colleagues.

So this list was created in response to that to highlight those companies that had model and best practices and communicate that.

Mrs. Mink. So now you have the Trendsetters List, and you have abandoned it again at the behest of the industry saying that we have now the tools for voluntary compliance, which we are putting together. Give us a chance to do this ourselves. Isn’t that the situation that you are in right now again, acceding to the industry?

If I were on the other side, I would be very angry at you for conceding all of the time, listening to the industry. What about us poor folks on the other end?

Ms. Seiden. Well, it is important for us to communicate information to consumers, and that's why the list is in a dormant status. But since the partnership is made up of the industry as well as human rights groups and consumer groups and labor groups, it seems like that partnership is an appropriate vehicle to take over this responsibility and communicate the message to consumers.

Mr. Hoekstra. I thank the witnesses for being here. Mr. Norwood has indicated that some of you may be invited back after we go through the documents to see how much integrity there was in developing the different kinds of lists. I think, as Professor Gellhorn said, if there is integrity in the lists, perhaps it is an appropriate role; questionable, but at least they are doing it right. If there is not integrity in the process, then the whole function and activity is questionable. But we will go through those documents over the coming weeks, and we will continue on this path.

Ms. Seiden. We would be happy to talk to you and your staff about those documents.

Mr. Hoekstra. Thank you for being here, and the committee will be adjourned.

Mr. Scott. Before you adjourn, we have a couple of letters that we would like to insert that were discussed by Mr. Norwood earlier.

Mr. Hoekstra. Without objection, they will be submitted for the record.

Mr. Hoekstra. The subcommittee is adjourned.

[Whereupon, at 12:17 p.m., the subcommittee was adjourned.]