April 18, 2019

State of Connecticut Auditors of Public Accounts Reports Department of Labor’s Deeply Flawed Organizational Practices

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House Republicans on Thursday afternoon called for public hearings in response to a report issued by the state’s Auditors of Public Accounts uncovering serious issues inside the Department of Labor, including untimely investigations into workplace violence within the department itself and widespread failures in critical administrative controls.

“The audit report that has been released today is egregious,” House Republican Leader Themis Klarides said. “The State of Connecticut Auditors of Public Accounts report of the Department of Labor (DOL) showcased the deeply flawed organizational practices spanning throughout the State of Connecticut. As the legislature is on the cusp of voting on several proposals that would task the DOL with new programs, it is clear through this audit report that DOL has struggled to handle basic administrative functions. Until these department issues have been resolved and a new audit has been conducted to confirm that all deficiencies found in this report have been rectified with protocol put in place to prevent any reoccurrence, no new responsibilities should be designated to DOL. Our new DOL Commissioner was part of and has inherited a seriously flawed system that must be addressed immediately.”

“The Department of a Labor is an agency that carries significant responsibility in this state, with its decisions, policies and actions carrying far-reaching implications for businesses big and small and the people they employ,” said state Rep. Joe Polletta, ranking member of the legislature’s Labor Committee. “Considering that, this is information that demands a public hearing—to give the department’s current and former leaders an opportunity to provide their response on the report’s findings, and for committee members to ask questions on behalf of Connecticut employers and employees who deserve to have confidence in this important department.”

The report identifies 27 different violations including: incidents of workplace violence, data breach of IRS information, unlawful vacancies and much more, provided below are excerpts from the report:

DOL did not investigate all workplace violence complaints in a timely manner. DOL took 60 days from the date of one ongoing incident to start its investigation. It took 148 days from the start of the investigation to the date DOL decided on disciplinary measures.
During the course of our review into a related matter, we became aware of a DOL Human Resources investigation into a complaint alleging violations of the Department of Labor’s code of conduct by an employee. These allegations were substantiated, but DOL did not discipline the employee until 152 days after the department received the complaint. Our office became aware of additional complaints against the same employee prior to DOL disciplining that employee.
Review of 25 STEP-UP agreements revealed that the design of the eligibility determination process did not include adequate procedures to verify all the employee eligibility criteria prior to grant approval.
Our review disclosed internal control deficiencies in the department’s maintenance of supporting documentation for all 15 employers reviewed. Our review also disclosed that the department cited 5 employers for violations of Section 31-57f of the General Statutes but did not impose any civil penalties. In addition, the department does not maintain a list of civil penalty violations by employer. The department continues to maintain paper case files and updates its case notes mainly by hand.
The Department of the Treasury, Internal Revenue Service completed a Safeguard Review in April 2014. The IRS reported findings concerning: maintaining a system of standardized records, maintaining a secure place for storage, restricting access to authorized individuals, employee awareness and internal inspections, submission of required safeguard reports, disposal of federal tax information, using federal tax return information, and computer systems security. In addition, DOL notified our office in the spring of 2016 of a server that appeared unsecured. Allegations that the server had been breached were made but later withdrawn. Initially, DOL was unable to ascertain whether the server had been breached. DOL later stated that it had not been breached, but could not provide substantiating documentation. In addition, IRS issued a Preliminary Findings Report in March2017. This report identified 5 critical and 2 significant items requiring correction to improve the safeguarding of federal tax information (FTI) in accordance with IRS guidelines. DOL needed to correct critical findings within three months (by May 31, 2017) and significant findings by August 29, 2017.
One member of the Employment Security Advisory Board was not appointed to the correct initial term; three of the five mediator positions required by Section 31-96 of the General Statutes were vacant during the audited period; the department paid members of the Board of Mediation and Arbitration for hearings that continued beyond the statutory limit without obtaining the Labor Commissioner’s prior approval; and only 3 of the 6 appointed members of the Employee Misclassification Advisory Board attended two meetings in the fiscal year ended June 30, 2013.