by Susan E. Prince, J.D., BLR Legal Editor
Knock, knock … Surprise! Believe it or not, the federal Department of Labor (DOL) does not require an investigator to previously announce the scheduling of a wage & hour investigation. The investigator has sufficient latitude to initiate unannounced wage & hour investigations, in many cases, in order to directly observe normal business operations and quickly develop factual information. The following are some strategies to prevent this knock from sounding at your company’s front door!
1. Avoid unfair compensation practices. Make sure employees are compensated in a consistent manner. If an employer’s pay practices are consistent, complaints are less likely to arise, and the employer will be in a better situation if DOL does launch a wage & hour investigation.
2. Understand the regulations. It is important that employers take the time and make a concerted effort to understand and familiarize themselves with the Fair Labor Standards Act (FLSA). It is the law, and if employers fail to follow the law they may face litigation or a DOL audit.
3. Training. Train managers so they are fluent in the language of the FLSA.
4. Analyze state versus federal law. Determine whether the state’s wage & hour laws conflict with federal law, then follow the law that is most beneficial to the employee.
5. Pay past overtime due. If it is determined that an employee is wrongly classified as exempt, the employer should determine how many overtime hours the employee has worked in the past 2 years, then pay the employee the overtime due. The employer should also have the employee sign a release to free the employer from further liability. Paying past overtime due to employees now will be far less expensive than paying them in a DOL settlement.
6. Follow child labor laws. Employers must determine a minor’s age and set his or her job duties and work schedules accordingly and carefully. Also, employers must file the minor employee’s age certificate, keeping it for as long as the minor is employed.
7. Pay your interns, unless they meet a strict test. Internships 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 typically must be paid at least the minimum wage and overtime compensation for hours worked over 40 in a workweek.
8. Respond to internal complaints expeditiously. If an employee files a wage & hour complaint internally, the employer should take it seriously. Since many investigations are prompted by an employee’s complaint, employers might be able to prevent an investigation by addressing an employee’s initial internal complaint.
9. Seek compliance assistance from DOL. Various compliance tools and information are available on DOL's website.
10. Conduct a self-audit. Employers can hire attorneys to audit their companies—or they can do it themselves before DOL initiates an investigation. Conducting a self-audit helps ensure compliance with federal and state laws. As part of an audit, employers should:
- Review job descriptions to determine whether they are still accurate, reflect the jobs being performed, and reflect the skills necessary to perform the job.
- Review employees’ 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 the workplace.
DOL investigators look for complete, accurate, and unambiguous pay records for every employee for each pay period from the past 3 years. As a result, it is imperative that employers strive to keep accurate, well-organized wage & hour records that can be produced quickly. If violations are found, the employer may owe back pay, face penalties, and be advised by DOL to make changes in employment practices in order to avoid future violations.
Wage & Hour Related Resources
Susan E. Prince, J.D., is a Legal Editor for BLR’s human resources and employment law publications. Ms. Prince has over 10 years of experience as an attorney and writer in the field of human resources and has published numerous articles on a variety of human resources and employment topics, including compensation, benefits, workers’ compensation, discrimination, work/life issues, termination, and military leave. Ms. Prince also served as an expert on several audio conferences discussing the 2004 changes to the federal regulations under the Fair Labor Standards Act. Before starting her career in publishing, Ms. Prince practiced law for several years in the insurance industry and served as president of a retail sales business. Ms. Prince received her law degree from Vermont Law School.