AUDITEE'S RESPONSE AND AUDITOR'S COMMENTS
 

MFET disagrees with the OIG's questioned costs of $2,890 that MFET charged to its overhead pool for office renovation work that had not been done. In the OIG's final exit conference held on February 2, 1998 via telephone, this issue was dropped as a finding. First, there is no OMB Circular which prohibits office renovation costs. MFET provided justification several times to the OIG on why this arrangement was made. This decision was reasonable and allowable in accordance with OMB Circular A-122 and normal and customary business practices. MFET did provide this justification to the OIG, however, they chose to disregard it. Again, the "unreasonableness" of the renovations is only the opinion of the OIG staff member.

We found that MFET's management engaged in questionable personnel practices designed to: (1) coerce, threaten and intimidate employees into making involuntary fund-raising contributions into an unrestricted farmworker fund to be used primarily to lobby lawmakers for legislation on behalf of farmworkers, and (2) place unnecessary restrictions over the usage of annual and sick leave earned by employees. These personnel practices are in violation of MFET's grant agreements, its own personnel policies and procedures, OMB Circular A-122 and JTPA regulations. These practices not only impacted employee wages and benefits, but also adversely affected employee morale.

MFET involved its employees in various fund-raising activities including payroll withholding contributions, travel reimbursement donations, and participation in an auction and raffle. MFET collected a total of $10,716 from payroll withholding contributions and travel reimbursement donations that we believe was involuntarily obtained from MFET employees during CYs 92 through 96.
 

"Currently there is a movement in Congress to place all 402 money in Block Grants. As a result, the State would be administering the money for the program.  This would not only eliminate MFET, but migrant and seasonal farmworkers would not be served the way MFET is able to provide services to them now.

"The Committee for Farmworker Programs (CFP) hires staff to lobby for the farmworker programs. The money from the Farmworker Fund will go to CFP which will help secure our position in the 402. MFET and other 402 agencies need to raise money to support CFP and be able to fund our lobbyist effort."

    As part of the grant agreements, MFET provided assurances that it would establish safeguards to prohibit employees from using their positions for a purpose that constitutes or presents the appearance of personal or organizational conflict of interest. We believe MFET's management violated this assurance by coercing, threatening and intimidating some of its employees into making involuntary fund-raising contributions to be used for lobbying Congress on behalf of legislation to help secure MFET's position (and ultimately their own positions and salaries) within the Migrant and Seasonal Farmworker community.

    Further, the Personnel Policies and Procedures of the Midwest Farmworker Employment and Training, Inc., Section IV, Selection for Employment, Paragraph I, Lobbying, Political Activities, and Unionization, states:
 

"Employees will not attempt to influence, in any manner, a member of Congress, State or local legislators to favor or oppose any legislation or appropriation by Congress or legislators." [Emphasis added.]

"The following costs are not allowable to the JTPA program . . . costs of any salary or expenses related to any activity designed to influence legislation or appropriations pending before the Congress of the United States."

"Notwithstanding other provisions of this Circular, costs associated with the following activities are unallowable . . . Any attempt to influence: (i)  The introduction of Federal or State legislation; or (ii) the enactment or modification of any pending Federal or State legislation through communication with any member or employee of the Congress or State legislature (including efforts to influence State or local officials to engage in similar lobbying activity), or with any Government official or employee in connection with a decision to sign or veto enrolled legislation."

    --         Employees who contributed the least would be the first to be laid-off if there were
                funding cuts.

    --         Contribute or expect some consequences.

    --         In order for employees to keep their jobs and receive salary increases, employees
                would have to contribute.

    --         Employees who did not contribute had bad attitudes and were not concerned enough
                about their jobs or the agency.

    In addition to these statements by the Executive Director, we were told by several current and former MFET employees that they were also coerced and intimidated by MFET's Deputy Director and Administrative Assistant. This coercion and intimidation included telling employees they were not contributing enough and repeatedly telling those employees who had not contributed that they were expected to make contributions.
 

    In our opinion, MFET's management, through the use of coercion, threats and intimidation, created an environment which precluded employees from having a choice whether to voluntarily contribute or participate in MFET's fund-raising activities. Further, the money from these fund-raising activities was to be used to fund MFET's lobbying efforts. Therefore, we believe that MFET should return all of the payroll withholding contributions, as well as the travel reimbursement donations, that were involuntarily obtained from its employees.

    We believe that in addition to the criteria previously cited, this coercion and intimidation may be in violation of the Minnesota Statutes, Labor/Industry, Section 181.937, Reprisals for failure to contribute; civil action, which states:

"No employer shall engage in any reprisal against an employee for declining to participate in contributions or donations to charities or community organizations, including contributions to the employer itself. Employer means any person having one or more employees in Minnesota and includes the state, the University of Minnesota, and any political subdivisions of the state. An employee injured by a violation of this section may bring an action for compensatory damages, injunctive or other equitable relief, attorney's fees and costs. For purposes of this section, reprisal means any discipline; any form of intimidation, harassment, or threat . . . " [Emphasis added.]

    On March 26, 1997, MFET's Executive Director provided a written response to the fund-raising issue. MFET maintains that the payroll withholding contributions were not involuntary. All persons donating to the fund through payroll deduction signed a statement indicating how much they wanted to contribute. The fiscal officer could not deduct any money without this form being signed. The payroll deduction form included a statement that this was a voluntary contribution and that no retribution would be suffered by those that did not contribute.

    We disagree with MFET's response that there is no evidence to support that the payroll withholding contributions were involuntary. We believe the fact that 18 current and former MFET employees told us individually that they were coerced, threatened and intimidated into making involuntary contributions is significant evidence that they were afraid and, thus, agreed to have payroll contributions deducted from their salaries and to make travel reimbursement donations. Many of these individuals documented the dates and times that the coercion, threats and intimidation occurred. Based on this evidence, we concluded that the payroll withholding contributions and travel reimbursement donations were involuntary and recommend that the $10,716 be returned to the respective current and former MFET employees.
 

AUDITEE'S RESPONSE AND AUDITOR'S COMMENTS
 

MFET disagrees with the OIG's statement that donations were "involuntarily obtained from MFET employees." MFET did not coerce, threaten or intimidate employees to contribute to its discretionary funds and OIG has thus far presented no compelling evidence to substantiate their opinion and belief.

Employees were given the opportunity to contribute through payroll deduction - some employees chose to contribute, others did not. Each employee, if they wished to contribute, signed a statement authorizing MFET to deduct an amount determined by them from their payroll checks. Once the employee signed this authorization form, MFET was legally obligated to provide this service, otherwise it would be violating people's right to contribute to their chosen cause. These payroll deduction forms went directly to the Payroll Department - MFET's Executive Director did not see these deduction forms and did not have any reason to see them.

The OIG list cites only 18 present and former employees that they spoke to but they completely ignored the approximately 100 authorizations from employees that were not complaining. MFET did not receive a request from those 18 former/present employees nor did OIG provide 18 names or amounts of employees supposedly requesting their contributions. OIG indicates documentation of dates and time of coercion, threats and intimidation but has not provided same for MFET's response.

It is unfair for the OIG to base their findings on statements attributed to the Executive Director without providing him with at least the appearance of a fair opportunity to respond. OIG does MFET and its Executive Director a grave injustice by unilaterally believing statements attributed to the Executive Director from disgruntled former employees.

The OIG incorrectly states that MFET used its discretionary funds to lobby congress in violation of its personnel policies or federal regulations. The citation of Board meetings is taken totally out of context. The minutes do not indicate that MFET took any actions to secure employment or benefits for any specific individual, as OIG seems to interpret the Board minutes. It is very common for community based organizations and individuals working within community organizations to speak of us in reference to migrant and seasonal farmworkers. MFET has used its farmworker fund for various activities not provided for in federal or state funds.

    We disagree with MFET that there is no evidence to support that employees were coerced, threatened and intimidated into making contributions to the Farmworker Fund. We interviewed 28 current and former MFET employees. Of these 28 employees, 18 told us that they were coerced, intimidated and threatened into making contributions. Many of these employees contacted us on their own and requested anonymity (which is OIG's policy to grant to the maximum extent possible) for fear of retribution. Several of these employees also told us that they felt intimidated into signing the authorization statement. Based on the information and documentation obtained, we continue to believe that MFET's management created a hostile environment which precluded employees from having a choice whether to contribute voluntarily or participate in MFET's fund-raising activities.
 

LEAVE USAGE

    We believe that MFET placed unnecessary restrictions on the usage by employees of earned annual (vacation) and sick leave. These restrictions are in violation of MFET's personnel policies and procedures and undermine earned annual and sick leave as an employee benefit. We also believe that these restrictions contributed to the fact that employees lost an aggregate total of 562 hours of annual leave during CY 96, valued at approximately $10,000. We based our conclusions on: (1) interviews with current and former MFET employees, and (2) documentation consisting of MFET memoranda to its employees and internal employee memoranda.

    Based on the above information, we determined that the unnecessary restrictions on the usage of annual and sick leave imposed by MFET's management on its employees included:
 

    --     suspending annual leave for a period of 90 days,

    --     permitting annual leave only in 4 hour increments, and

    --     requiring employees to report to work to prove his/her illness prior to approving sick
            leave.

    MFET's Personnel Policies and Procedures Manual designates annual and sick leave as employee benefits. These policies and procedures establish rates and policies for earning and using leave and do not include provisions that allow for the above-mentioned restrictions.

    On March 26, 1997, MFET provided a written response. MFET responded that leave was suspended for 90 days because agency goals were not being met and some employees did not want to recognize the importance of meeting the goals. As with all agencies/employers, when to take annual leave is an employer prerogative. Of course, MFET balances the employee needs/wishes with the agency needs. MFET could have exercised this prerogative on a case by case basis and accomplished the same objective. But management exercised its best business judgment and decided to be up front with all employees and in an effort to achieve the goals through a team effort, all employees were informed of the suspension of annual leave for all employees. Historically, MFET's main office employees have not considered themselves part of the effort that must be instituted to meet the agency's performance goals. The attitude has always been that they only process the paper and therefore they should not have to be concerned with performance goals . . . that is someone else's job. Many of the main office's employees believe that they should be held to different work standards and work ethics. Continuing, MFET stated that it should be noted that some employees were able to circumvent this policy by simply calling in sick. It should further be noted that during this period that most of the annual leave that could have been accumulated could also have been taken prior to the end of the year. Therefore, if employees lost annual leave, due to accumulating more than the maximum allowed to be carried over, it was not due to leave

    We recognize that MFET's management has a right to balance organizational goals and objectives with employee wishes/needs in the course of approving leave. However, as MFET pointed out in its response, we believe that MFET should have exercised the decision to approve leave on a case-by-case basis instead of uniformly suspending annual leave for all its employees (including those employees who had no impact whatsoever on improving program performance).

    By uniformly suspending annual leave for such an extended period of time, MFET's management denied all employees certain employee benefits that were granted in MFET's own policies and procedures manual. We believe that this 90-day suspension of annual leave (coupled with subsequent denials of annual leave requests on a case-by-case basis) was a major contributing factor to employees losing significant amounts of annual leave at the end of the leave year. According to MFET's records, the annual leave lost at the end of the year by MFET employees had a value of approximately $10,000.


AUDITEE'S RESPONSE AND AUDITOR'S COMMENTS
 

MFET disagrees with the finding of the OIG regarding leave usage and believes that this is an attempt by DOL to micromanage MFET's operations. The OIG is incorrect in stating that MFET was not in compliance with its own Personnel Policies. In fact, all annual leave must be approved by the employee's supervisor and the Executive Director for it to be valid and granted. In addition, with the exception of two, all staff listed as losing annual leave are management employees and all management employees have more flexibility with work hours. They did have the opportunity prior to February 1996 to take annual leave. The two non-managerial staff members were both long-term employees and were well aware that 240 hours was the maximum annual leave. Since they were long-term employees they would always be close to 240 hours, and this is the reason for losing hours and not the suspension of annual leave. These same people lost time before and after this suspension.