Ranking Member Report: The Nomination of M. Patricia Smith of New York, Nominee to Serve as Solicitor of Labor, U.S. Department of Labor: Accuracy of Senate Testimony

United State Senate
Committee on Health, Education, Labor and Pensions
Michael Enzi (Wyo.), Ranking Member
RANKING MEMBER REPORT:
The Nomination of M. Patricia Smith of New York, Nominee to Serve as Solicitor of Labor, U.S. Department of Labor: Accuracy of Senate Testimony
U.S. Senate
111th Congress
Committee on Health, Education, Labor and Pensions
February 1, 2010
Table of Contents
I. Executive Summary…………………………………………………………………………….…..1
II. Background………………………………………………………………………………...….…… 3
A. Role of Solicitor of Labor
B. Commissioner M. Patricia Smith
C. Wage and Hour Watch
D. Unions and Consumer Groups
III. Chronology of Ms. Smith’s Nomination……………………………………………………...…7
IV. Factual Inconsistencies between Senate Testimony and NY State Documents……......9
A. Issue: Expansion of Wage and Hour Watch
• Finding: Misled the Committee about whether the NY Department of Labor planned to expand the program
B. Issue: Wage and Hour Watch Development in House with NYDOL
• Finding. Misled the Committee about Wage and Hour Watch developed internally
C. Issue: Wage and Hour Watch as an Education Program and Not an Enforcement Program
• Finding. Misled the Committee that Wage and Hour Watch is an educational program
D. Defenses Offered for Inconsistencies
V. Other Issues with the Nominee…………………………………………………..…………..…29
A. Targeting Small Business
B. Privacy and Related Issues
C. Wage and Hour Watch Modeled after Union Organizing Initiatives
VI. Conclusion………………………………………………………………………………………....40
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I. EXECUTIVE SUMMARY
During Commissioner Patricia Smith’s May 1, 2009 interview with Health, Education, Labor and Pensions (HELP) Committee staff, her May 7, 2009 confirmation hearing and in subsequent questions for the record, she was asked about a program called Wage and Hour Watch that she and her subordinates implemented in the State of New York. The Wage and Hour Watch program recruits and trains union organizers and public interest groups to go into businesses with compliance literature and interview employees to discover violations of wage and hour law.1
Ms. Smith testified to various aspects of the program in the hearing and in questions for the record from four Senators, including former Chairman Kennedy. Her responses when compared to official records of the State of New York are inaccurate in a number of significant areas: The State of New York gives participants materials to disseminate and official cards identifying them and their group as being part of the program for when they enter businesses and speak with employers and employees.
• Plans for Expansion:
• Ms. Smith denied that she had plans to expand the Wage and Hour Watch program. However, documents obtained from the State of New York contain more than 50 specific references to program expansion. E-mails sent immediately before and after her hearing show that expansion efforts were well under way.
Education vs. Enforcement:
• Ms. Smith stated the program was designed to be an educational effort. However, documents and her own speeches show it was designed as an enforcement program from the beginning and she even set up a hotline for union organizers and community activists. ID cards were distributed so that these groups could enter businesses to question employees and employers.
Internal vs. External Development:
The record specifically shows she provided inaccurate characterizations and factually incorrect testimony in five instances over the course of several months, both orally and in writing. Importantly, in each instance of inaccurate testimony, her statements had the Ms. Smith stated that the program was created internally, by her staff, in her State Labor Department. However, the program was actually promoted and designed by a head union organizer and a community activist organization -- working in concert with her senior staff.
1 January 26, 2009 New York State Labor Department press release (hereinafter “Jan.26 release”) (available at http://www.labor.state.ny.us/pressreleases/2009/Jan26_2009.htm) (Exhibit).
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effect of downplaying the extent of the Wage and Hour Watch program, which Ms. Smith knew was a concern of many Committee Members. Only when questioned on these inconsistencies did she admit three months after her testimony in a confirmation hearing that she had “misspoken.” The program Ms. Smith launched is highly controversial for other reasons also:
• Targeting Small Business:
• The program targets small- and medium-d businesses, but Ms. Smith did not consult with the business community while creating the program. It was only after small business representatives raised concerns about potential abuse that she met with them. This happened more than a month after the program was launched and too late to make significant changes.
Invasion of Privacy:
• The program directed participants to gather personal telephone numbers, vehicle license plates and home addresses of business owners. Labor organizers and community activists were even allowed to use this information and the contact information for employees for their own organizing activities.
Labor Organizing:
This report provides a detailed summary and citation to official documents obtained from New York to demonstrate factual inconsistencies in Ms. Smith’s testimony and other concerns raised. It concludes that Ms. Smith’s statements to the Committee were in direct contradiction with documents provided to the HELP Committee. Ms. Smith stated the program would not be used for union organizing. Documents obtained from the New York State Labor Department and a union newsletter show plans specifically to use the program for union organizing throughout New York.
Letters to the President from Senators Enzi and Senator Isakson and a letter to Chairman Harkin signed by all ten Republican members of the HELP Committee request Ms. Smith’s nomination be withdrawn because she does not meet the high standards required and will not have the confidence of the United States Senate if confirmed.
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II. BACKGROUND
A. Role of the Solicitor of Labor
The Solicitor of Labor plays a key role in nearly every policy, regulatory and enforcement decision at the U.S. Department of Labor, and is responsible for ensuring that all stakeholders, including small businesses, are given fair treatment. As the third highest official and the head law enforcement officer, the Solicitor of Labor leads one of the largest legal offices in the federal government with a staff of more than 400 attorneys. The Solicitor is counted on to be fair in enforcing the law and candid in his or her interactions with the public and its representatives in Congress while doing so.
With nine Divisions in the National Office and 8 regional offices and 6 sub-regional offices, the attorneys who work in the Office of Solicitor play a national role in labor law enforcement in wage and hour matters, mine safety and health, occupational safety and health, internal union elections, equal employment opportunity for federal contractors, whistleblower protections, and pensions and health plans, among other things.
Unlike most legal offices in cabinet agencies, the Department of Labor has independent litigation authority from the Department of Justice and the Solicitor of Labor exercises that authority on behalf of the Department. Under many of the statutes enforced by the Labor Department, the Solicitor has prosecutorial discretion in cases he or she and staff bring.
The importance of the Solicitor is also likely to increase demonstrably over the next few years as the Administration greatly expands the number of investigators in the agencies that the Solicitor legally supports. For example, the Department of Labor’s proposed FY 2010 budget notably adds 1,000 new employees, including about 670 investigators for Departmental enforcement agencies.2
B. Commissioner M. Patricia Smith
According to the New York State Department of Labor (NYDOL), Commissioner M. Patricia Smith has been involved in labor matters for over 30 years.3
2 See President’s 2010 Budget (http://www.whitehouse.gov/omb/budget/fy2010/assets/lab.pdf); May 7, 2009 U.S. Department of Labor Press Release (http://www.dol.gov/opa/media/press/oasam/OASAM20090489.htm). Before coming to the Labor Department as an appointee of former Governor Elliott Spitzer, Ms. Smith served as Chief of the Labor Bureau in the Office of the New York State Attorney General under Elliott Spitzer for eight years. For 11 years, Ms. Smith served as Deputy
3 http://www.labor.state.ny.us/agencyinfo/executivestaffbio.shtm.
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Bureau Chief and Section Chief of the Labor Bureau, conducting and overseeing labor law litigation in state and federal courts. In 1996 and 1997 as Deputy Bureau Chief, she argued two Employment Retirement Income Security Act cases before the United States Supreme Court. Before joining the Office of the Attorney General, Commissioner Smith worked for various Legal Services Organizations representing unemployment claimants, minimum wage workers, workers in federal job training programs and job seekers.
Since becoming Commissioner of Labor for New York State in early 2007, Ms. Smith launched a number of initiatives including Wage and Hour Watch and the Bureau of Immigrant Workers’ Rights inside the New York Department of Labor. Like Wage and Hour Watch, the Bureau was designed to expand “partnering with unions, labor and immigrant groups to target our enforcement efforts to keep our most vulnerable workers from being exploited.” Ms. Smith had also undertaken similar programs and initiatives while in the Attorney General’s Office including a Green Grocer Code of Conduct; partnering with advocacy groups; targeting enforcement efforts on an industry-wide basis; and focusing on low-wage and immigrant workers. 4
The Deputy Commissioner for Wage and Immigrant Services in New York is Terri Gerstein. Ms. Gerstein joined the Labor Department in March, 2007. Prior to her current position, Ms. Gerstein worked in the Labor Bureau of the New York State Attorney General's Office. She has worked with Ms. Smith for the last five years and moved with her from the Attorney General’s Office to the Labor Department.
C. Wage and Hour Watch
On January 26, 2009, Wage and Hour Watch5
4 Id. was launched as “a new tool in the fight against labor law violations in New York State. New York Wage Watch will focus on a variety of illegal practices, jointly referred to as wage theft…Modeled in part after the Neighborhood Watch program, [the program] will help promote labor law compliance through formal partnerships between the New York State Labor Department and community groups” and “provide ordinary people with a formal and systematic role in the fight against wage theft.” In the press release, Commissioner Smith is quoted as follows: “New York Wage Watch will increase labor law compliance by giving regular
5 A number of documents, including the initial January 26, 2009 press release from the New York State Department of Labor named the program simply “Wage Watch.” Due to intellectual property issues the program was later renamed “Wage and Hour Watch.”
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people a formal role in creating lawful workplaces statewide, and thereby improving the
quality of life in their communities.”6
The program was launched with several groups in New York City and Long Island
reportedly for the first six months, and would “then be opened up to interested groups
from throughout the state.” Participating pilot groups were required to select a
geographic zone, and hold know-your-rights training and provide employers with
compliance information. They also were to distribute “literature to workers in
supermarkets, laundromats, nail salons, and other community settings…” and “will have
a designated point person for referrals in the Labor Department’s Division of Labor
Standards, which enforces wage and hour laws.”
D. Unions and Consumer Groups
The six groups NYDOL decided to partner with because they were appropriately active
in labor issues and had referred cases in recent years were: Centro del Immigrante in
Staten Island;7 Chinese Staff and Workers' Association;8 Retail, Wholesale and
Department Store Union (RWDSU);9 Make the Road New York;10
6 See Jan. 26 release.
United Food and
7 El Centro de Immigrante serves Staten Island with a focus on providing services and assistance to
Hispanic/Latino immigrants and refugees and their families.
http://www.silive.com/news/index.ssf/2008/11/project_hospitality_hosting_3.html
8 The Chinese Staff & Workers' Association (CSWA) brings together “workers across trades to fight for
change in the workplace as well as in the community-at-large” and has a membership of over “1,300
workers from various trades and ages, injured and non-injured, documented and undocumented” that
work in restaurants, garment and construction, and caregiving, as well as disabled workers, retirees, and
youth. http://www.cswa.org/www/about_us.asp.
9 The Retail, Wholesale and Department Store Union represents and organizes members who work in a
wide variety of occupations that range from food processing to retail to manufacturing to service and
health care. http://rwdsu.info/about.htm.
10 “Make the Road New York promotes economic justice, equity and opportunity for all New Yorkers
through community and electoral organizing, strategic policy advocacy, leadership development, youth
and adult education, and high quality legal and support services.”
http://www.maketheroad.org/whoweare.php. According to its website, over a dozen unions and union
trusts, including two of the other Wage and Hour Watch groups, contribute support to Make the Road.
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Commercial Workers (UFCW) Local 1500;11 and The Workplace Project in Long
Island.12
According to the January 26, 2009 press release, the Department of Labor cited as part
of the genesis for Wage and Hour Watch, its prior relationships with RWDSU and Make
the Road in an investigation of a commercial strip in Bushwick, Brooklyn.13
11 The United Food and Commercial Workers Union Local 1500 represents workers throughout the
Metropolitan New York area. http://www.ufcw1500.org/content/page/title/History.
12 The Workplace Project assists Latino immigrant workers of Long Island.
http://www.workplaceprojectny.org/index_files/Page385.htm
13 See Jan. 26 release.
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III. CHRONOLOGY OF MS. SMITH’S NOMINATION
• April 20, 2009 - The President nominated Commissioner M. Patricia Smith to be Solicitor of Labor at the U.S. Department of Labor.
• May 1, 2009 - Commissioner Smith met with staff for the HELP Committee in a telephone interview to discuss her nomination, including the Wage and Hour Watch program.
• May 7, 2009 - Ms. Smith testified at a confirmation hearing before the HELP Committee. During the hearing Ms. Smith was asked about the Wage and Hour Watch program. 14
• May 13, 2009 - Ms. Smith responded to Questions for the Record (QFRs) from Senators. In her responses, she declined to provide Wage and Hour Watch documents, stating that the documents were the property of the State of New York and referring the Committee to the State. 15
• June 4, 2009 - Pursuant to Ms. Smith’s response to QFRs, the Ranking Member of the HELP Committee, Senator Enzi, requested Wage and Hour Watch documents from the State of New York under its Freedom of Information Law (FOIL).
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• June 16, 2009 through the first week of July - The State of New York responded with several deliveries of documents.
17
• July 28, 2009 - Ms. Smith responded to a second round of QFRs from Senator Enzi regarding Wage and Hour Watch.
18
14 Hearing before the U.S. Senate Health Education Labor and Pensions Committee, Thursday, May 7, 10:00 a.m., available at https://www.help.senate.gov/Hearings/2009_05_07/2009_05_07.html (hereinafter “Confirmation Hearing”).
15 Ms. Smith responded to the first round of Questions for the Record on May 13, 2009 (hereinafter “May 13 Responses”).
16 Senator Enzi’s letter is attached as an Exhibit.
17 See June 16, 2009 Letter from Joan Connell, Deputy Counsel for the New York Department of Labor to Senator Enzi attached as an Exhibit. In order to access documents that would ordinarily be withheld from a non-Chairman request, the Ranking Member and Chairman agreed to treat confidential materials produced by New York under Senate Rule XXIX.5. Accordingly, there are other documents that cannot be disclosed or referenced without agreement from the HELP Committee Chairman. This report only references information contained in the documents identified by the State of New York as non-confidential.
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• August 24, 2009 - Senator Enzi officially requested the White House withdraw Ms. Smith’s nomination.19
• September 9, 2009 - Ms. Smith responded to QFRs from Chairman Kennedy.
20
• September 10, 2009 - Senator Isakson asked President Obama to withdraw Ms. Smith’s nomination.
21
• October 6, 2009 - All Republican Members sent a letter to Chairman Harkin stating their opposition to Ms. Smith.
22
• October 7, 2009 - The HELP Committee approved Ms. Smith’s nomination on a party-line vote of 13-10, and forwarded the nomination for floor consideration.
23
18 The responses to Senator Enzi’s July QFRs are attached as an Exhibit.
19 Senator Enzi’s letter is attached as an Exhibit.
20 The responses to Senator Kennedy are attached as an Exhibit (September 9 Responses).
21 Senator Isakson’s letter is attached as an Exhibit.
22 The joint letter is attached as an Exhibit.
23 A copy of Senator Enzi’s Remarks at the Markup are attached as an Exhibit.
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IV. FACTUAL INCONSISTENCIES BETWEEN SENATE TESTIMONY AND STATE OF NEW YORK DOCUMENTS
A. ISSUE: EXPANSION OF WAGE AND HOUR WATCH
At the May 7, 2009, confirmation hearing, Senator Burr specifically asked Ms. Smith about the Wage and Hour Watch program and potential expansion:
Senator Burr. Have you had any discussions relative to your being at the Department of Labor that would extend Wage Watch in any fashion on a Federal level?
Smith Response. No, we have not had any discussions of that. I have not had any discussions with the Department of Labor in New York about whether we would extend it across New York State. Again, it is a pilot program which we just did in January. We specifically limited it to a small number of groups, and we limited it to a small geographic area. We limited it to basically New York City, Long Island, the lower Hudson Valley so that we could assess what the successes would be, what the problems would be.24
On May 13, 2009, Ms. Smith also responded in writing to Questions for the Record from several Senators about Wage and Hour Watch and potential expansion of the program. In each case, she responded as follows:
Smith Response: This initiative was designed as a local model in a limited geographic area in a state, for a particular issue under a particular statute. It was not designed for other laws or to be used on the federal level. Until the pilot is completed and evaluated, I would not advocate expanding it to other areas in New York, to other areas of the country, to the federal level or to other federal or state laws.25
On April 9, 2009, an email from NYDOL’s Director of Strategic Enforcement to Ms. Smith’s Deputy, Terri Gerstein, lists Wage and Hour Watch expansion groups, including NYS Laborers Organizational Fund, NY Labor Organizing Fund, Concrete Workers District Council, NYCOSH, Hudson Valley Community Coalition, and Westchester Hispanic. A separate email on the same day names two additional groups and their contact info so Ms. Gerstein can “send them an email and the application form.”
26
24 See Confirmation Hearing (emphasis added).
25 See Ms. Smith’s May 13 Responses (emphasis added).
26 See April 8, 2009 email from Ms. Gerstein to seven Department of labor employees.
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On May 15, 2009, an email was sent from the New York State’s official Wage and Hour
Watch account27 to over 20 individuals announcing preparations to “expand Wage and
Hour Watch” and soliciting the groups’ involvement. An application form is attached to
sign up for the program with a deadline for submission of June 15, 2009.
Additional Evidence Regarding Expansion
Dozens of documents, including both internal and external NYDOL communications,
detail plans to expand the program to up-state and/or statewide with many stating a
June 2009 deadline. Initial plans to expand the program and how to do so are part of
the November 7, 2008 write-up created by the State of New York, RWDSU, Make the
Road and the National Employment Law Project. The document includes specific
references to both upstate and downstate contact persons with plans to “expand to
include a broader range of groups” after a pilot/trial run. Ms. Smith is referenced as
having named the program during this email exchange and carbon copied on the email
exchanges.28 Notably, program expansion is also included in the very first public press
release:
After a six-month pilot period with these groups, the Labor Department will begin
seeking additional groups who wish to participate statewide.
27 New York created a separate email account to correspond with those wanting to join the program and
those already involved. Ms. Gerstein and her secretary generally sent all email from this account and
reviewed incoming requests.
Each group should
be a non-governmental, non-profit entity, such as a community group, religious
organization, student group, labor union, business association, or neighborhood
association. Groups must have at least six members and must select a
geographic region to focus upon – this may be as small as several blocks in an
28 November 7, 2008, email from Ms. Gerstein to several NY DOL staffers and outside groups noting that
Smith had developed the name for the project “Wage Watch” and soliciting comments on proposal writeup.
FINDING: MS. SMITH MISLED THE COMMITTEE ABOUT WHETHER NYDOL
PLANNED TO EXPAND WAGE AND HOUR WATCH
Although Ms. Smith stated in response to questions at her confirmation hearing
and again in questions for the record that there were no plans to expand the
program until there was a thorough evaluation of the pilot, she and her
subordinates were exhorting groups to join, sending out applications and
promoting and committing to expansion to news media, their own staff, the pilot
groups and others both before and after she testified.
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urban setting or as large as several counties elsewhere. Groups need not have
prior labor-related experience…. To find out what you can do to establish a New
York Wage Watch group in your community, send an email to
NewYorkWageWatch@labor.state.ny.us or call 1-888-52-LABOR. 29
Likewise, the materials developed for distribution to both employers and employees as
part of the program provide: “We are from an official ‘Wage Watch’ group, working in
conjunction with the New York State Department of Labor to promote labor law
compliance in our community and throughout the state
The New York Times covered the launch and in relevant part noted: “after the first
experiment in New York City and on Long Island, the Labor Department will seek
additional groups for the program. The groups must be nongovernmental and nonprofit,
and can include religious organizations, student groups, labor unions, business
associations and neighborhood groups.”
” (emphasis added).
30
Documents from the State of New York and press reports quoting NYDOL show the
following over twenty references to expansion plans:
• On December 1, 2008, Ms. Smith and her Deputy, Ms. Gerstein, received a list of
fourteen upstate groups compiled by the head of the New York Labor
Department’s Bureau of Immigrant Worker Rights to be considered for the
program.
• On December 22, 2008, an email sent from Ms. Gerstein to the New York Labor
Department’s Director of Strategic Enforcement and other NYDOL staff states
”once the pilot has been under way for a requisite time period(perhaps six
months), the program would be expanded to other interested groups.”
• On January 15, 2009, Ms. Smith sent an email to all relevant NYDOL staff
announcing the program: “After six months, once we have had the chance to get
the program rolling, we would like to expand to other groups (particularly
upstate), including community based organizations; student groups; churches
and other faith-based organizations; and labor unions….This is an exciting new
initiative, and one which could potentially be replicated elsewhere in the country.
I hope that you will make every effort to help the program succeed.”
29 Jan. 26 release (emphasis added).
30 “Street-Level Groups Enlisted to Report Labor Violations,” New York Times, Sewell Chan and Colin
Moynihan, January 28, 2009.
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• On January 18, 2009 an article in The Times Union by Eric Anderson noting that
the NYDOL had “announced the formation New York Wage Watch, described as
a tool to fight wage theft statewide.”31
• On January 24, 2009, an email sent to and from Ms. Smith regarding materials to
prepare for the press conference launching Wage and Hour Watch include
numerous references to plans to expand the program, as well as suggestions of
taking it nationwide. The memorandum describing the press event provides:
“The idea would be to replicate this kind of model, first in the city, then across the
state and eventually take this program nationwide. Just like ‘Neighborhood
Watch,’ the sky’s the limit…Once the pilot has been under way for a requisite
time period (perhaps six months), the program will expand to other interested
groups.” Similarly, talking points prepared for the rollout sent to and from Ms.
Smith contain the following: “Our goal with Wage Watch is to pilot it in a few
select areas in New York City, bring it to upstate New York, build a movement
and let it spread across the country like a wildfire...As we roll the program upstate
in the near future, it may be a town, city, county or set of counties…you’ll be
tasked with training future Wage Watchers. You’re the beginning of a movement,
and the movement begins here….But until the day comes [when employers fully
comply], we’ll continue to do everything in our power to prevent wage theft in this
state. And Wage Watch will be a key component in the fight.”
Ms. Smith nor NYDOL spokespersons
appear to have sent a correction request that Wage and Hour Watch was only
regional or a pilot program.
• Questions and Answers attached to the Jan. 24, 2009 email exchange with Ms.
Smith include the following expansion references:
When can we anticipate an upstate rollout? It really depends on the
success of the downstate rollout. We’re working hard …to build these
relationships upstate with the hope of rolling this out sometime in the near
future…
Where can ordinary citizens who want to be a part of Wage [and
Hour] Watch contact the Department of Labor? They can email us at
wagewatch@labor.state.ny.us or call us at 1-888-52-LABOR. Please keep
in mind that we’ll be rolling out this pilot slowly, with the ultimate goal of
rolling out city and statewide….
31 http://www.timesunion.com/AspStories/story.asp?storyID=761009&TextPage=1.
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You’re starting with six organizations. How many would like to end with in 2009? I’d say realistically, we’d like to double to 12 organizations in New York City by the end of the year, while laying the foundation to expand the program to various parts of Long Island and upstate New York. We’re creating a movement here, and the more the merrier….
As we roll the program upstate in the near future, it may be a town, city, county or set of counties.
• A January 27, 2009, Epoch Times reported: “If proven successful, the Department will extend the program to the entire city, State and recommend it be adopted nationally.”32
• On February 2, 2009, Ms. Gerstein sends emails from the Wage and Hour Watch email account to two individuals advising on how to start a Wage and Hour Watch group: “Are there any other people who might want to form a Wage Watch group with you? The idea of the program is to involve groups of six or more people” and “We are starting the program with six groups but hope to expand in a few months. We are looking for groups of six or more people to form a New York Wage Watch group.”
• A February 13, 2009, article in The Nation, quoting Ms. Smith in part, notes: “A pilot program targeting low-wage industries where abuses are rampant will launch in New York City and Long Island before expanding statewide.”33
• On February 18, 2009, Ms. Gerstein sent an email to two NYDOL personnel stating “We will be expanding the program in several months,” and soliciting names and information on interested groups.
• On February 27, 2009, an email from Ms. Gerstein outlines a meeting with pilot groups and includes a paragraph on future expansion and the need to set up training in June in both New York City and upstate.
• On March 9, 2009, Ms. Gerstein sends an email discussing the signup application form for expansion.
• Also on March 9, 2009, an email from Ms. Gerstein also discusses developing a website including application forms for groups to sign up.
32 http://www.theepochtimes.com/n2/content/view/11008.
33 “Watching Wages," Max Fraser, The Nation, www.thenation.com/doc/20090302/noted?rel=hp_subs.
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• On March 20, 2009, an email from Brian O’Shaughnessy, Executive Director of the New York State Labor-Religion Coalition, sent to Ms. Gerstein states: “Pat[ricia] spoke at [a] dinner a week ago and said something like ‘Labor-Religion Coalitions are perfect fits for the Wage and Hour Watch program.’ I agree, especially our Coalitions in Buffalo, Syracuse and Albany. Can you make sure we get on the list as possible new community organizations for the next phase of …trainings?...Might it be possible to include a day’s training on Wage and Hour Watch [in the fall]?” Ms. Gerstein responds with a proposed teleconference.
• Materials used at an April 2, 2009 press event by Ms. Gerstein regarding Wage and Hour Watch state in relevant part: “But working in partnership with concerned citizens like all of you, we can most definitely expand our reach. You may not know it yet, but everyone here today is laying the foundation for something big. You’re the beginning of a wave that could spread across the state and nation. We’re getting calls from community groups around the state, as well as other states and they all have one question: How can we be a part of this new movement?…One citizen at a time, one community at a time, we will build coalitions across the state – beginning with all of you.”34
• In an April 7, 2009, email from Ms. Gerstein, she solicits feedback from Wage and Hour Watch participants on their experiences and a draft application form for the “next expansion” of Wage Watch. In what appears to be notes for her speech, she also states: “After six months …we would expand to other groups (particularly upstate)…” and later “This is an exciting new initiative, and one which could potentially be replicated elsewhere in the country.”
35
• A May 13, 2009, email from Mr. Eichler of RWDSU that is carbon copied to Ms. Gerstein states: “Listed below is the requested information for two groups that are interested in becoming Labor and Hour Watch groups.”
• On May 14, 2009, Mr. Eichler requests updates from Ms. Gerstein on “joining and training schedules” for expansion plans.
• A May 19, 2009, National Public Radio article quoting Ms. Smith and Ms. Gerstein notes: “New York’s Wage Watch is just a few months old, and officials
34 Undated Talking Points for Ms. Gerstein to be used at April 2, 2009 event.
35 It is unclear if the program had already expanded at this point or if this statement incorrectly implies there has already been an expansion.
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say it’s too soon to measure success. But the pilot program is set to expand across the state this summer.”
• A May 26, 2009 email to members of the New York State Labor-Religion Coalition from Brian O’Shaughnessy attaches a NYDOL document that is “NOT in final form and for internal use ONLY of those on this email) from DOL that I believe may answer many of your questions” about the program and plans for expansion. 36
• A June 3, 2009, email to several dozen outside third parties and NYDOL individuals forwards a solicitation from the Worker’s Rights Center offering “an unusual training opportunity that could strengthen worker power and enforcement of labor laws in our region…being considered for nomination to the Wage and Hour Watch Program…We will be submitting the names of at least six individuals who will serve as ‘Wage and Hour Watch members’ for a period of two years. Those people will be provided with one day of training (in Syracuse, most likely), and possibly additional training as needed.” Nominations are asked for “by June 9, 2009 at 4:30p.m.”
• On June 9, 2009, a formal application facsimile is sent to Ms. Gerstein from the NY Laborers Organizing Fund for joining wage watch in the construction industry as part of the expansion.
• In addition to expanding in her own state, Ms. Smith and her staff of NYDOL officials provided outlines of the program to government employees in Ohio and San Francisco to explore launching their own Wage and Hour Watch programs.37
Over four months after her nomination hearing, Ms. Smith responded to questions from HELP Committee Chairman Kennedy as follows:
At the time of my confirmation hearing I had no discussions about a potential expansion of Wage and Hour Watch with anyone
36 In a July QFR response from Ms. Smith, the Committee was later informed that this document is a copy of the original version of the agreement between pilot groups and the Department of Labor. , other than generally indicating that if it were proved successful, my goal would be to expand it to other areas of New York State. At that time, I had not authorized my staff to proceed with a
37 See, e.g., February 19, 2009 email from the NYDOL Director of Strategic Enforcement to the San Francisco Office of Labor Standards Enforcement (San Francisco also describes its program “Community-Based Labor Enforcement” in the subject line and provides a contract it entered with La Raza Cebtro Legal, Inc. to perform general outreach on labor law also).
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statewide expansion of the program, nor had I discussed them with any steps
that were preliminary to a possible expansion. My first substantive discussion
about the steps needed to be taken to evaluate any potential expansion of Wage
and Hour Watch occurred in late May 2009 with my Executive Deputy
Commissioner.38
However, even this attempt to correct her original oral and written responses is factually
inconsistent with documents provided to the Committee by the State of New York. In
fact, there did not appear to be any documents in the over 2,000 pages provided that
support Ms. Smith’s subsequent statements that there were no plans for expansion.
A key example of this contradiction is an undated set of speech talking points for Ms.
Smith to an upstate labor-religion coalition group sometime after January 2009 but
before Ms. Smith testified at her confirmation hearing: “We’re currently piloting [Wage
and Hour Watch] with six distinct labor unions and advocacy organizations in New York
City and Long Island, and plan to roll it out across the state in coming months and
years. We will be expanding the program, and when it does come upstate, we’ll need
the help of many of you to roll it out.” (emphasis in original). As with all of the above
documents, there is no discussion of program evaluation or other qualifier on this
commitment to expand. As such, this public statement prepared for Ms. Smith
sometime in March or April of 2009,39
Contrary to her testimony, the State also expanded the program in scope as well as
geography -- from wage and hour issues to occupational safety and health enforcement.
An email from the New York Committee for Occupational Safety and Health (NY
COSH), a safety and health public interest group with ties to organized labor,
contradicts her later statements on expansion
plans before the Senate approximately a month and a half later.
40
38 Kennedy QFR September 9, 2009 response (emphasis added).
sent to
Ms. Gerstein on February 6, 2009, notes: “we will contact each of the participating
groups and their organization training on what safety and health issues they should be
looking for while conducting the oversight for wage and hour issues.” Ms. Gerstein
39 The speech references a February 26, 2009 announcement from the Department of Labor having
occurred several weeks before. Based on this reference and a discussion of other contemporary
activities, the timeframe would fall sometime in mid-March most likely.
40 NYCOSH “is a non-profit coalition of 200 local unions and more than 400 individual workers,
physicians, lawyers and other health and safety activists - all dedicated to the right of every worker to a
safe and healthful job. Part of a nation-wide network of 25 union-based safety and health organizations,
NYCOSH fights job hazards where the fight is needed most: on the shop floor.”
http://www.nycosh.org/about_NYCOSH/about.html.
17
solicits a list of things to train wage and hour watchers to look out for, and NY COSH
responds with a list as well suggesting that the groups take pictures of working
conditions they believe unsafe.41
In summary, the official State of New York records show that both before and after Ms.
Smith testified at her nomination hearing before the Senate that there were no plans to
expand the program, Ms. Smith’s agency had been promoting expansion, signing up
additional groups and sent out and accepted applications to groups to join Wage and
Hour Watch.42
B. ISSUE: WAGE AND HOUR WATCH DEVELOPMENT IN HOUSE BY
NYDOL
Ms. Smith knew about these activities since she is copied on or involved
in interviews or discussions in which those commitments and plans are discussed. As
a result, she misled the U.S. Senate in denying there were any expansion plans.
At Ms. Smith’s confirmation hearing the following exchange occurred regarding the
Wage and Hour Watch program’s genesis:
“Senator Burr. But you reached out to individuals and groups to help craft the
specifics of [Wage and Hour Watch]—
“Ms. Smith. Actually, no, Senator, we did not. This was an internally crafted group.
It was only after we sat down and crafted it ourselves that we reached out to groups
to see if they would be interested.” 43
Similarly, in response to Senate QFRs on May 13, Ms. Smith stated: “My staff had done
considerable work researching Neighborhood Watch and developing the concept of this
initiative and felt it was time to present the Department’s ideas for what is now known as
Wage and Hour Watch, to gauge the possible interest of these two groups with whom
we had worked and to get feedback.”44
The State of New York’s official records actually show that two of the pilot groups, the
Retail Warehouse and Department Store Union (RWDSU) along with Make the Road, a
public interest entity financed in part by unions and loosely allied with ACORN on
41 February 6, 2009 email exchange between Ms. Gerstein and NY COSH.
42 E.g., May 15, 2009 email to interested groups requesting form submittal by June 15, 2009; June 1,
2009 email to interested groups.
43 Confirmation Hearing.
44 May 13 Responses to Sen. Enzi.
18
various issues according to its own representative,45
On April 16, 2008 Jeff Eichler, coordinator for retail organizing projects for RWDSU
sends an email to Terri Gerstein, Deputy Commissioner of NYDOL, also forwarded to
the NYDOL Director of Strategic Enforcement, with four pages of attached research
explaining potential models for “our concept of wage and hour enforcers.”
were heavily involved in
developing all aspects of the program from April 2008 forward. They, along with the
National Employment Law Project, another public interest group, participated in: a)
deciding participant eligibility, b) drafting program documents, c) creating training
materials and conducting training, d) developing press strategies, as well as other
contributions to the development of Wage and Hour Watch. The documents provided
by New York in fact show almost no purely internal government development of the
program.
On August 15, 2008, another email from Mr. Eichler to Ms. Gerstein describes various
other models including one used by the Service Employees International Union in Los
Angeles to infiltrate janitorial contractors. There is a follow-up email exchange between
Mr. Eichler and Ms. Gerstein on September 18, 2008, regarding additional
“neighborhood watch” research.
A meeting is held on November 7, 2008, which Commissioner Smith also attends,
between NELP, Make the Road, RWDSU and the New York Labor Department.
45 See http://www.maketheroadny.org/whoweare_oursupport.php; February 2, 2009 email from Make the
Road to T. Gerstein, Deputy Commissioner of Labor for New York regarding relationship with ACORN.
FINDING: MS. SMITH MISLED THE COMMITTEE ABOUT THE INTERNAL
DEVELOPMENT OF WAGE AND HOUR WATCH
Ms. Smith misled the Committee when she stated in response to questions at her
confirmation hearing and again in questions for the record that the Wage and
Hour Watch program was developed internally and only then did the New York
Department of Labor approach outside groups. Official records actually show
union and community organizer involvement from the very beginning.
19
• On November 7, 2008, Ms. Gerstein sent an email to several NYDOL staffers and the outside groups that had attended the meeting noting “that Smith had developed the name for the project Wage Watch” and soliciting comments on the meeting minutes. Commissioner Smith is carbon copied on the email.
ADDITIONAL COMMUNICATIONS WITH OUTSIDE GROUPS
• On November 11 and 13, 2008, the RWDSU and NELP sent in comments on the meeting minutes. The November 13, 2008 email from the groups recommends designating wage and hour watch participants as authorized representatives of the State. The comments are forwarded to Ms. Smith via carbon copy on Nov.28.
• On December 2, 2008, an email from NELP discusses developing a standardized form for the State to use for investigation referrals by the pilot groups.
• A January 6, 2009, email from Make the Road to the development group discusses obtaining outside private funding for the pilot groups involved in the program: “Foundation funding would certainly make it more feasible for us and other organizations to dedicate real staff time to the project.” In response, Ms. Gerstein agrees to support the pursuit of funding for the outside groups. Ms. Smith is carbon copied on both exchanges.
• A January 23, 2009 email from Make the Road to Ms. Gerstein and others attaches a draft violation reporting form.46
A January 24, 2009, memorandum to Ms. Smith preparing to launch Wage and Hour Watch on January 26, 2009 discusses her agency’s close relationships with community organizers and unions, noting that Make the Road “submitted a written memo to legislators on our departmental bills last year” and that UFCW Local 1500 “was outstanding in reaching out to many other unions as well to contact legislators on other departmentals such as WARN. He has already asked to meet with Alyssa Talanker once our departmental for this year are announced to see how he can help.”
47
When asked to reconcile the outside union and community organizing group involvement in all aspects of developing and implementing the program, Ms. Smith
46 Copies of these documents are attached as an Exhibit.
47 See January 24, 2009 Memorandum to Ms. Smith (attached to email sent from Ms. Smith to Ms. Gerstein on January 24, 2009).
20
acknowledged in response to QFRs from Chairman Kennedy in September that the program apparently was not of internal construction:
Until I saw the emails supplied to the Committee in July 2009, I had no knowledge of anyone outside the Department being involved in the origins of the program or in its development prior to November 2008.
Notably, Ms. Smith admits that she saw the emails but did not correct her testimony until directly asked about the contradictions by former Chairman Kennedy in September -- which was four months after her testimony had been given and two months after documents had been provided to the Committee. The State of New York’s documents actually show that the program was initially researched, promoted and developed by a union organizer and community activist group instead of New York State officials as Ms. Smith stated in May. However, even if I had knowledge that someone outside the Department had been involved, that would not have influenced, in a positive or negative way, my consideration of the program. I was judging the advisability of such a program on its merits alone. (emphasis added).
C. ISSUE: WAGE AND HOUR WATCH AS AN EDUCATION PROGRAM AND NOT AN ENFORCEMENT PROGRAM
Ms. Smith stated at her hearing that the Wage and Hour Watch program was developed for educational purposes:
The second thing is that we have limited resources in New York as we do everywhere in government. And I am very committed to the concept of education, both employer education and worker education. So the substance of Wage Watch's purpose is to engage groups to help us with education. So we have a pilot program which we have just begun. We have six groups which were picked on the basis of our prior experience with them, so I knew they were reliable and sensible groups. We developed training. We developed an agreement, and they have agreed to do educational events both for workers and employers.48
However, NYDOL officials, including the Director of Strategic Enforcement, the union organizer and the public interest group that helped design the program, characterized the program participants in emails as “enforcers” from the beginning.
49
48 Confirmation Hearing. Later materials,
49 See, e.g., April 16, 2008 email from RWDSU to Terri Gerstein, Deputy Commissioner of New York State Department of Labor (explaining potential models for “our concept of wage and hour enforcers”).
21
including an email discussing the training and a training synopsis document describe
participants as “community enforcers.”50 The groups involved in developing the
program also suggested deputizing participants as official State investigators for certain
purposes and recommended a program model where participants would “infiltrate”
businesses or conduct “surveillance” of businesses.51
Any educational aspects of the program were not emphad by NYDOL, Ms. Smith in
her speeches, or in the public media. In the email sent to NYDOL officials to announce
the program on January 15, 2009, Ms. Smith notes that the groups are not replacing
staff or going to be official representatives of her agency but “[t]he goal of the program,
as with all our enforcement efforts, is labor law compliance throughout the
state”(emphasis added).52
What is the focus of New York Wage [and Hour] Watch? Will they be
referring all violations they identify or maybe just the most egregious
cases? The goal of Wage Watch group is to help [the New York Department of
Labor] identify the most egregious violators, and also to extend [the Department
of Labor’s] reach in the area of labor law enforcement.
Ms. Smith’s talking points for her speech to launch the
program state: “What we’re rolling out today is labor law enforcement at its grassroots
core.” According to the Questions and Answers developed for the January
announcement of Wage and Hour Watch:
Will Department of Labor staff be going out with Wage Watchers? Since the
purpose is to “watch” different neighborhoods and to multiply enforcement efforts,
sending our staff and the wage watchers together to the same events may be
duplicative.53
An internal memorandum sent to Ms. Smith on January 24, 2009, describing the
program also noted the intent to elevate the standing of the pilot groups: “An employer
is more apt to listen to an ordinary citizen if there is some kind of sanctioned affiliation
50 See Dec. 1, 2008 email from The Director of Strategic Enforcement to RWDSU, Make the Road and
Gerstein; Proposed Outline for Training Curriculum “The Role of the Community Enforcer (one and a half
hours).”.
51 August 15, 2008 email from Mr. Eichler to Ms. Gerstein and response from Ms. Gerstein to Mr. Eichler
on August 18 re: infiltrating businesses and additional research.
52 January 15, 2009 email from Ms. Smith to NY Department of Labor staff.
53 See January 19, 2009 Questions and Answers. The Department does also mention educational
aspects of the program tangentially in the question and answer responses: “When do the Wage [and
Hour] Watchers start? Hopefully, by the end of February, we should have Wage Watchers out there,
talking to workers, talking to businesses, and raising awareness of labor laws in their communities.”
22
with DoL, and thus will be more inclined to take them seriously.” Similarly, the Department highlighted in the Questions and Answers the fact that it intended to provide identification cards to the unions and community organizing groups to show that their members were affiliated with the Department of Labor:
Will Wage [and Hour] Watchers have some sort of identification that states their affiliation with the Labor Department? We’re still working logistics of this out and we hope to have it ironed out by the time these men and women receive training next month. It may be a certificate, and it will probably be small enough to fit in a wallet.
The Labor Department eventually created official State Identification cards for the Wage and Hour Watch participants and issued the following to the pilot group participants:
Ms. Smith’s talking points for the launch of the program also included the following exhortation: “Never forget when you’re out in public, you are a reflection of our agency and its mission, and you’ll be held to a high standard.”54
“In our experience, community monitoring of employer conduct is critical to ensure that employers caught violating the law today actually pay their workers correctly tomorrow. Employers will be dramatically less likely to violate wage and While the press release does mention the educational aspects of the program, the pilot groups’ spokespersons also focused on the enforcement and investigatory nature of the program in the press release as follows:
54 January 24, 2009 Talking Points for Ms. Smith’s January 26, 2009 press conference.
23
hour law when they know that trained community members are on the ground as the eyes and ears of the DOL’s wage enforcement units.” - Amy Carroll of Make the Road
"New York Wage Watch is labor law enforcement at the purest, most grassroots level. This program will allow unions, community groups and churches to engage in the fight against the exploitation of workers in our neighborhoods.” -- Stuart Applebaum, President of RWDSU55
“The Wage Watch program will now allow us to link a trained community team to work closely with the New York State Department of Labor, so that employers will not be able to abuse workers with impunity. The Workplace Project is excited to participate in this innovative partnership with the DOL and looks forward to engaging many more community members to stop wage theft through this collaboration." -- Nadia Marin-Molina, Executive Director of the Workplace Project
56
On February 9, 2009 -- two days after the training of the participants was complete and the State identification cards issued -- five small business trade associations noted the program’s clear enforcement purpose and other specific concerns to Ms. Smith by letter:
To give quasi-enforcement capabilities to certain, seemingly hand-selected constituencies sets a troubling precedent that could spread among the spectrum of state agencies. We wonder how such an effort can create an atmosphere of anything other than vigilantism where every honest employer will have a legitimate concern for the preservation of his or her rights as a taxpaying business owner in the state of New York. The image painted by the Department of Labor in its January 26, release is of a posse of activists, duly deputized by the weighty imprimatur of the Department, demanding access to any employer in the state whom they have chosen either at random, or by prejudice.57
55 RWDSU’s media advisory on January 14, 2009 also emphad that Wage and Hour Watch was “a new program designed to protect workers from wage theft by their employers.”
56 Jan. 26 release.
57 See February 9, 2009 letter to Commissioner Smith from the Food Industry Alliance of New York, NY Restaurant Association, Empire State Restaurant & Tavern Association, Retail Council of New York, and New York Association of Convenience Stores (hereinafter “Trade Association Letter”) (attached as an Exhibit).
24
Ms. Smith attempted to downplay the fears of the small business groups; however, the
record shows Wage and Hour Watch participants were closely aligned with and involved
in NYDOL enforcement actions. For example, a February 26, 2009, NYDOL media
advisory announcing a press conference on a significant enforcement action noted that
UFCW Local 1500 and other Wage and Hour Watch participants would be attending the
press conference held by Ms. Smith. Later, an April 1, 2009 New York State Media
Advisory regarding Wage and Hour Watch discusses the fact that pamphleteering and
compliance is part of the program but also states in relevant part: “Grassroots labor law
enforcement is hitting the streets in a big way this Thursday at the kickoff even for Wage
and Hour Watch!...After working on cases like Ollie’s Chinese Restaurants and Amish
Gourmet Markets, it’s evident that employers need to know that someone is ‘watching.’
Press reports pointed out the investigatory nature and enforcement side of the program:
“To crack down on businesses that pay less than the minimum wage, fail to pay
overtime to pay wages altogether, steal tips or commit other unfair labor violations, the
New York State Department of Labor is starting an experimental program that will rely
on community organizations to monitor compliance with labor laws.”
You are welcome to shadow one of our groups as they march in the communities.”
(emphasis added).
58 The New York
City cable news channel, New York 1, stated: “Among the businesses in New York,
what's described as an invisible crime is about to be attacked by a new and longer arm
of the law. …On Monday, the department of labor launched a wage enforcement
program called Wage Watch.”59
The pilot Wage and Hour Watch groups also promoted the enforcement message
independently. Make the Road’s supervising attorney Amy Carroll is quoted in a New
York Times article:”We want employers to know there are costs for violating the law.
They can’t get away with it.”60
58 “Street-Level Groups Enlisted to Report Labor Violations,” New York Times, Sewell Chan and Colin
Moynihan, January 28, 2009 (hereinafter “Street Level Groups”)
In its June 2009 union newsletter, UFCW Local 1500
congratulated Ms. Smith on her nomination to be Solicitor of the U.S. Department of
Labor and described the program as follows: “modeled after crime-fighting
59 See www.ny1.com/content/top_stories/92854/labor-laws-focus-of-new-watch-program/default.aspx;
see also Watching Wages, The Nation " Max Fraser,
www.thenation.com/doc/20090302/noted?rel=hp_subs. (“New York Wage Watch will train grassroots
organizations to monitor working conditions in their communities and refer violations to the Division of
Labor Standards.”).
60 “Street-Level Groups,” New York Times.
25
neighborhood watch groups, in which community organizations, immigrant groups and labor unions will help serve as the department’s eyes and ears to report violations.”61
The groups’ involvement in the program also included participating in enforcement actions developed from their referrals. In written Questions and Answers, the NYDOL publicly committed to sharing information on the case referrals with all the pilot groups: “Will the Department of Labor have specific staff assigned to this pilot program? There will be a point of contact within the Division of Labor Standards who will be responsible for providing wage watch groups with an update on the cases they refer to us.”
62
In March 2009, Ms. Smith’s talking points for a speech to an upstate labor-religion coalition group provided in relevant part: “Just as Neighborhood Watch programs reduce crime by involving ordinary citizens in the effort to keep their communities safe, New York Wage [and Hour] Watchers will strengthen labor law compliance through labor
law enforcement at the grassroots level.”63
Accordingly, Ms. Smith’s own words, as well as other NYDOL officials and her staff’s internal and public statements and deliberations, and the groups involved in the program all emphad and portrayed Wage and Hour Watch as an enforcement program from its very beginning. It was only at her nomination hearing before the U.S. Senate when she was questioned about the program, that Ms. Smith chose to portray the program’s “substance” as educational in nature.
61 “Ms. Smith Goes to Washington,” The Register, June 2009 (available at http://www.ufcw1500.org/files/shared/JUNE09.pdf). The newsletter notes the educational aspects as a secondary aspect: “In addition, those groups will help educate local employers on what they need to do to comply with the law.”
62 See Questions and Answers prepared for the Jan. 26, 2009 rollout (attached to Jan.24 email from Ms. Smith).
63 See Ms. Smith’s undated Talking Points for March Speech (emphasis added).
FINDING: MS. SMITH MISLED THE COMMITTEE THAT WAGE AND HOUR WATCH IS AN EDUCATIONAL PROGRAM
Ms. Smith characterized Wage and Hour Watch as an educational program at her confirmation hearing. The State of New York’s documents as well as public pronouncements by those involved, including Ms. Smith, consistently emphad that Wage and Hour Watch was designed and implemented as an enforcement program.
26
D. DEFENSES OFFERED FOR INCONSISTENCIES
Some have argued, including Members at the October 2009 Executive Session in the HELP Committee, that Wage and Hour Watch was a minor program and that Ms. Smith’s lack of candor in testifying about it was because she was busy and uninformed.64
I had little personal involvement in the early development of the Wage and H