Thousands of employers get a figurative knock-on-the-door each year from an investigator from the U.S. Department of Labor’s Wage and Hour Division. WHD is the agency responsible for enforcing the Fair Labor Standards Act, the Family and Medical Leave Act, the Davis-Bacon Act and the Service Contract Act, among other laws. A visit from WHD can be stressful — and rightfully so, since it can result in a huge bill for back wages or even being put out of business. In this piece, we provide tips for reducing stress and coping with an investigation.
Tip #1: Maintain the records required by law and keep those records handy.
DOL’s FLSA regulations require employers to keep certain records about their employees’ hours worked and to make those records available to a WHD investigator on 72-hours’ notice. No specific form of record-keeping is required. The records may be in a state-of-the-art timekeeping system or on the back of a paper napkin. What’s important is that they exist, you know where they are and you can produce them for the investigator within 72 hours of a demand.
Tip #2: Don’t obsess over who complained.
WHD may initiate an investigation of an employer for a number of different reasons. For instance, an employee may have provided a tip or lodged a complaint, or there may be a high rate of noncompliance in your industry. In the first scenario you might be better off not knowing the identity of the complaining employee. It’s illegal to retaliate against an employee who makes a complaint.
Tip #3: Be polite and professional, even if the investigator isn’t.
Your job is to show the investigator and his or her supervisor (typically a district director) that your company and its managers are law-abiding citizens and decent folks, and that any noncompliance the investigator uncovers was unintentional. Act like you have something to hide and you’ll only make DOL more curious and aggressive.
Tip #4: Know your rights.
There are many rights afforded to employers, during an investigation including that investigations may only be conducted during regular business hours, unless the employer requests a different time and employers are entitled to some information up front about the purpose of the visit and the investigation’s general scope. Investigators are also not supposed to remove records belonging to employers from the establishment, unless absolutely essential to the investigation. Be sure to consult a knowledgeable attorney or familiarize yourself with DOL’s resources including the department’s Handy Reference Guide to the Fair Labor Standards Act and Field Operations Handbook.
Tip #5: Get legal advice.
If you have not already done so, it is time to involve an attorney who is familiar with the FLSA and other laws being investigated. A letter from an attorney to a WHD investigator stating your case is likely to get passed-up the chain of command and help you get the attention of someone in charge. A knowledgeable attorney can help you identify the facts and legal arguments supporting your position. Even when an employer has violated the FLSA or another wage-and-hour law, your attorney may be able to build a case that will lead to a reduction of DOL’s back wage claim. Also, an attorney can make sure that you aren’t admitting wrongdoing, which can be important for a number of reasons.
Tip #6: Follow the law.
“Bad apples” among employers are likely to be caught sooner or later. But what about well-meaning employers that make innocent mistakes? Logic and anecdotal evidence suggest that a well-treated workforce is less likely to complain about perceived wrongs and borderline violations. And many, if not most, investigations are the result of employee complaints. Thus, employers that make a good faith effort to comply with the law, and whose employees see that, may be less likely to be investigated for their occasional, unintentional mistakes.
This excerpt is just the tip of the iceberg of what you need to know if you are facing a DOL audit. For a full analysis of what to do to survive an audit, and the rights and resources available to employers, readers should consult the HR Intelligence section of Thompson’s HR Compliance Expert.
Shlomo D. Katz, counsel in the Washington, D.C., office of Brown Rudnick LLP, practices wage and hour law and advises clients on employee classification and salary test issues. He has successfully litigated before federal, state and local courts, the U.S. Government Accountability Office and the U.S. Boards of Contract Appeals. Mr. Katz also is co-author of Thompson’s FLSA publications.