Knock, Knock, DOL Calling

When the DOL (Department of Labor) comes calling, there could be big bucks at stake, says BLR® Legal Editor Susan Prince, JD. In today’s Advisor, Prince clarifies DOL’s rights during investigations.

Although no industry is immune from a wage and hour investigation, the Wage and Hour Division (WHD) has targeted low-wage industries with vulnerable, and often immigrant, workforces, and those industries with a history of chronic violations, including garment manufacturing, agriculture, and health care.What Does the DOL Do When It Audits a Business?

When a wage and hour investigation is initiated, the DOL may:

• Enter and inspect the business under investigation. The WHD does not require an investigator to previously announce the scheduling of an investigation, although in many instances, the investigator will advise an employer before opening the investigation.
• Examine records to determine which laws or exemptions apply. These records include, for example, those showing the employer’s annual dollar volume of business transactions, involvement in interstate commerce, and work on government contracts.
• Inspect up to 3 years of payroll and time records and make transcriptions of the records. The DOL looks for complete, accurate, and unambiguous pay records for every employee for each pay period from the past 3 years.
• Question employees. The purpose of these interviews is to verify the employer’s payroll and time records, to identify workers’ particular duties in sufficient detail to decide which exemptions apply, if any, and to confirm that minors are legally employed. Interviews are normally conducted on the employer’s premises. In some instances, present and former employees may be interviewed at their homes or by mail or telephone.
• Investigate. Investigators may Investigate facts, conditions, practices, or other matters to determine whether any person in the business has violated the provisions of the FLSA or to help in the enforcement of such provisions.

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Why Is an Employer Selected for an Investigation?

• The WHD conducts investigations for a number of reasons, all having to do with enforcement of the laws and ensuring an employer’s compliance. The WHD does not typically disclose the reason for an investigation. Many are initiated by complaints. All complaints are confidential; the name of the worker and the nature of the complaint are not discloseable; whether a complaint exists may not be disclosed.
• In addition to complaints, the WHD selects certain types of businesses or industries for investigation. The WHD targets low-wage industries, for example, because of high rates of violations or egregious violations, the employment of vulnerable workers, or rapid changes in an industry such as growth or decline. Occasionally, a number of businesses in a specific geographic area will be examined. The objective of targeted investigations is to improve compliance with the laws in those businesses, industries, or localities.

Employers who violate wage and hour provisions of the FLSA are liable for unpaid minimum wages or unpaid overtime compensation to affected employees and damages. The amount of the penalty generally depends on the size of the business and the seriousness of the violation.

A person in violation of the wage and hour provisions may be fined, imprisoned, or both. The WHD may supervise the payment of back wages. The Secretary of Labor may file suit for back wages and an equal amount as liquidated damages, or an employee may file a private suit for back pay and an equal amount as liquidated damages, plus attorneys’ fees and court costs.

Employers may be represented by their accountants or attorneys at any point during this process. When the investigator has advised the employer of his or her findings, the employer or representative may present additional facts for consideration if violations were disclosed.

Enforcement and Remedies

What enforcement procedures and remedies are provided under the laws the DOL administers?

Employees who have filed complaints or provided information during an investigation are protected under the law. They may not be discriminated against or discharged for having done so. If they are, they may file a suit or the Secretary of Labor may file a suit on their behalf for relief, including reinstatement to their jobs and payment of wages lost plus monetary damages.

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In the case of the government contracts statutes, contract funds may be withheld for violations under the Walsh-Healey Public Contracts Act, McNamara-O’Hara Service Contract Act, Davis-Bacon and Related Acts, and Contract Work Hours and Safety Standards Act. Administrative hearings or, in some cases, court action may be initiated to recover back pay under these laws. In addition, liquidated damages may be assessed for certain violations. Violators of these laws may also lose their Federal contracts and be declared ineligible for future contracts for a specified period.

In tomorrow’s Advisor, Prince’s 10 strategies for dealing with wage and hour audits, plus we announce a free (thanks to sponsor SourceCast) webinar to get you up to speed on the March 24 deadline for new government contractor rules.