Employers should seek more time to compile their wage and hour records and complete an internal or legal review of the records before providing them to a wage and hour investigator. But employers too often hand over their records to investigators without first reviewing them for compliance, according to James Coleman, a lawyer with Constangy, Brooks, Smith & Prophete in Fairfax, Va., and Washington, D.C.
Organizations should obtain legal advice before furnishing records and data to the investigator, he noted. “State and federal agencies that investigate wage and hour compliance often provide very short notice of an investigation, but in almost all cases they can be convinced to allow more time for the gathering and compiling of records by the employer,” Coleman said.
Other common errors employers make during U.S. Department of Labor (DOL) and state audits, according to Coleman, include:
- Behaving in an adversarial way toward the investigator.
- Refusing to consider allowing the investigator to interview employees at work and on the clock after preparing the workers for the interview.
- Acting as though the employer has something to hide.
“Be cooperative, but don’t give away the store,” said Steven Suflas, an attorney with Holland & Hart in Salt Lake City.
Wage and hour investigators “are overworked and underpaid,” he said. “They almost always react better to an employer that treats them professionally and politely. Remember that they want to finish the audit as quickly as possible, so be organized in providing the requested documents effectively and efficiently.”
However, employers should not give the investigators everything they request immediately, he said.
Common mistakes employers make when federal or state wage and hour investigations begin, according to Suflas, include:
- Signing forms the auditor presents at the post-audit meeting without reviewing them. The forms may contain admissions of liability.
- Presenting documents to the auditor in a disorganized manner, making their job harder. “Sloppy documents thrown across the table may show the auditor a path to other violations they otherwise weren’t looking for,” Suflas said.
- Failing to prepare for a review of all required U.S. Department of Labor and U.S. Department of Homeland Security paperwork.
Suflas emphasized that employers should involve legal counsel at the outset.
Perennial Issues in DOL Audits
“Compliance with applicable federal and state wage and hour laws should remain a top priority for employers,” said Steven Pockrass, an attorney with Ogletree Deakins in Indianapolis.
Under the Fair Labor Standards Act (FLSA), employers must pay employees at least $7.25 per hour and 1.5 times their regular rate of pay for all hours worked beyond 40 in a workweek, unless the employees qualify for an exemption. Employers should note that the FLSA sets the minimum requirements and that many states have higher minimum wages and more generous rules for paying overtime premiums.
DOL investigators will gather data on wages, hours, and other employment conditions to determine if a business is complying with federal law, and they may recommend changes in employment practices when they find violations.
During investigations, Pockrass said, the DOL looks for errors regarding how employers calculate overtime, so employers must calculate overtime properly. Common errors include failing to consider shift premiums and distinct types of bonuses as part of the overtime calculations, he noted.
“The DOL also will ask about meal breaks during its investigations,” Pockrass added.
The FLSA does not require that employees other than minors receive any breaks, whether paid or unpaid. Rather, FLSA regulations set forth only when breaks must be paid if they are offered at an employer’s sole discretion.
Some states require 30-minute meal breaks for workers. However, meal break compliance remains complex and frequently litigated.
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