Labor Secretary Raymond J. Donovan yesterday proposed a plan to crack down on busines paying workers below the federal minimum wage and engaging in other abuses of worker rights guaranteed under the Fair Labor Standards Act.

Donovan outlined a five-point plan aimed at curbing so-called "sweatshop" operations in a speech prepared for delivery before the National Business Roundtable. The plan includes the following measures:

Civil fines of $2,500 to $10,000 "for repeated failure to keep payroll records," with the amount of the penalty being related to the extent of the offense.

Additional fines of $2,500 to $10,000 for repeated failure to pay the federal minimum wage -- currently $3.35 hourly -- and earned overtime.

Employer payment of back wages to the Department of Labor for employees who cannot be located for compensation.

Extending the statute of limitations under which FSLA violators can be prosecuted for labor law offenses.

Calculating back wages due employes in such a manner that no worker due back pay loses money because the statute of limitations has expired. This would be done by starting "the meter running on the statute of limitations at the time the investigation is initiated," Donovan said.

However, hours before the plan was released by the Labor Department, Donovan himself -- in testimony before the House labor standards subcommittee -- was accused of attempting to undermine the labor law.

Management and labor representatives appearing before the subcommittee said that Donovan's plan to repeal a 40-year-old prohibition against performing certain kinds of industrial work in the home would produce more sweatshops, exploit more children and bring more illegal aliens to the United States in search of work.

"Industrial homework has always been a way to violate the law with nearly total impunity," said Sol Chaikin, president of the International Ladies Garment Workers' Union.

"To argue, as the secretary of labor does, that legalization of homework would encourage enforcement of the law is to fly in the face of all experience and to reject the conclusions of common sense," Chaikin said.

Donovan was not at the hearing. But, in the speech to the business group, he rejected the allegation -- made by other labor leaders -- that he was playing on both sides of the sweatshop fence by enforcing laws on one side while repealing them on the other.

"We will be creating a regulatory framework that makes sense, penalizing the exploitation of workers wherever it exists, but not penalizing work," Donovan said.

The labor secretary said he is aware of the "loud and extremely harsh denunciation" of his agency's efforts to change laws affecting workers' safety and health and other labor-related matters. "We have been accused of being antiworker, when nothing could be further from the truth," Donovan said. b