You?ve just received notice that the U.S. Department of Labor has launched an investigation into wage-and-hour issues at your company. The DOL?s William Richardson has two pieces of advice:
- Get ready to act fast.
- Never call a DOL investigator an auditor. According to Richardson, a Labor Department community outreach and planning specialist, ?Audi??tors look for nickels and dimes.? DOL investigators aim higher.
They?re looking for compliance with the Fair Labor Standards Act (FLSA), and they?re about to take a close look at your pay practices.
The goal: to make sure you are following the law?and to secure back pay for employees if they have been underpaid.
Why us?
You may be tempted to ponder what got you into this mess, but it isn?t productive. Richardson points out that investigations can arise for any of several reasons.
It may have been because a current or former employee complained about your pay practices. It may be because the DOL is targeting wage-and-hour problems in your industry. In recent years, the department has launched several such ?directed case? investigations of the hospitality and agricultural industries.
Or you could just be a random target.
3 days to prepare
Regardless of the reason, it?s time to whip into action. Employers get just 72 hours? notice of an FLSA investigation. Then investigators will be knocking on your door. That?s not much time.
First things first: Get your documents in order. Investigators will ask to see original paycheck and payroll records for the period being investigated, including records of any pay adjustments that may have been made. That means paper records, not spreadsheets or other electronic compilations of pay data.
Also not acceptable: re-created records. Occasionally, Richardson observes, employers try to fill in the record-keeping blanks with ?fresh? ?copies of allegedly old documents, using the same pen, with the same handwriting. ?Those are fraudulent records,? Richardson says, ?and investigators have fun finding them.?
If you don?t have original documents, say so.
Walking and talking
In addition to going over your documentation, DOL investigators will walk around your premises counting heads to see if the number of employees matches your payroll records.
You should designate a company official?someone from HR or payroll, or (if yours is a small business) perhaps the owner?to accompany investigators as they tour your operation.
They will stop to interview your employees about your wage-and-hour practices. When they speak with nonexempt employees, Richardson says, company officials can?t listen in, because employees might be intimidated. Employers can be present when current exempt employees are being interviewed.
Note that it?s not unusual for inves??tigators to hang out near the entrance at closing time to talk to employees after work.
Richardson says investigators will also ask for a list of exempt employees who have left your organization within the past two years. That?s the statute of limitations for non-willful FLSA violations.
?Former employees are a font of in??formation? for investigators, Richard??son says, ?because they have nothing to lose.? Investigators will query them about their duties, since they are interested in determining whether they were truly exempt.
The final conference
Investigators will disclose their general findings to you at a final conference, Richardson says.
However, don?t expect them to re??veal how much back pay you owe, if any. That won?t happen until you agree to come into compliance. Shortly, you will receive a notice summarizing the investigator?s findings.
If you owe back pay, you will usually have 90 days to compensate your employees. If the amount of back pay is high, the DOL will often let you pay employees in installments. But to get that break, you?ll have to show the DOL that you are experiencing serious financial problems, Richardson says.
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