What Happens when the DOL audits your business?

Posted on March 4, 2014 by Rick Rossignol

 When a wage and hour investigation is initiated, the DOL sends a letter explaining the complaint and everything they want to look at. The key for the employer is to have everything they want ready for them. What is important to remember is that they can start down a path and change directions pretty quickly based on information they see. Example, I had them come in regarding an issue in Production Accounting. They came to a very quick conclusion that was not a problem. But noticed that in one department all employees were listed as exempt and wanted to talk with a couple employees in a completely different department. They get to pick and no management employees can be present during their interview with the employee. Your worst nightmare is they pick the one or two disgruntled employees to interview.   I think the hardest part for me was they wanted address of all employees terminated within the last three years so they could contact and ask them about their experience with the company.

  • 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 most instances, present and former employees will 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.

The employers best defense is a very good offense. A audit of your Human Resources systems is a good way to ensure that you are in compliance.

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