Believe it or not, the federal Department of Labor (DOL) does not require that an investigator announce the scheduling of a wage & hour investigation. An investigator has sufficient latitude to initiate unannounced wage & hour investigations to directly observe normal business operations and obtain information.
The following are some strategies to prevent such an investigation:
- Avoid unfair compensation practices. Compensate employees consistently. If pay practices are consistent, complaints are less likely to arise, and you will be in a better position if DOL does launch a wage & hour investigation.
- Understand the regulations. Understand the Fair Labor Standards Act (FLSA). It is the law, and failing to follow it could subject you to litigation or a DOL audit.
- Train managers thoroughly. Managers should understand the FLSA and follow it.
- Analyze both state and federal law. Determine whether your state’s wage & hour laws conflict with the federal law, then follow the law that is the most beneficial to the employee.
- Pay past overtime due. If it is determined that an employee is wrongly classified as exempt, you should determine how many overtime hours the employee has worked in the past two years , then pay him or her the overtime due. You should have the employee sign a release freeing you from further liability.
- Follow child labor laws. You must determine a minor’s age and set his or her job duties and work schedules accordingly. You must also file the minor’s age certificate and keep it as long as the minor is employed.
- Pay interns, unless they meet a strict test. Internship in the for-profit, private sector will most often be viewed as employment by the DOL, unless a strict test is met. Interns who qualify as employees rather than trainees must be paid at least the minimum wage and overtime for hours worked over 40 in a workweek.
- Respond to internal complaints quickly. If an employee files a wage & hour complaint internally, you should take it seriously. You may be able to prevent an investigation by addressing an employee’s initial internal complaint.
- Seek compliance assistance from DOL. Compliance tools and information are available on DOL’s website.
- Conduct a self-audit. Hire an attorney to audit your company or do it yourself before DOL initiates an investigation. An audit can help ensure compliance. Review job descriptions to make sure they are accurate and reflect the jobs performed and the skills needed. Review actual job duties to ensure that they still fall within the administrative, executive, professional, computer, or outside sales exemptions. Make sure overtime for nonexempt employees has been properly calculated. Make sure the required posters have been hung in the appropriate places.
In addition, be sure that records are complete, accurate and unambiguous. Pay records for every employee for each pay period should be maintained for three years.
If violations are found, you may owe back pay, face penalties and be instructed by DOL to make changes in your employment practices.
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