Beware - The DOL May Be Coming To Your Door
By: INGRID N. CULP
March 2001
What would you do if your company received a letter from the United States Department of Labor ("DOL") stating that an investigator would be at the door in the next few days to talk to the company's employees and examine the company's wage and hour records? Worse, what if an investigator showed up unannounced and demanded to speak with employees and to rifle through the company's records? This article addresses the DOL's investigatory process and suggests ways to manage liability in the face of an investigation.
Does the DOL have the right to investigate? The Wage and Hour Division of the DOL has the right to investigate a company's records and talk to employees about pay practices. Although most investigators will notify an employer prior to starting an investigation, such notice is not required. If the company is investigated, you can expect the DOL to come to the facility, gather and review company records, interview employees, and make a determination about potential violations of the Fair Labor Standards Act ("FLSA"). If you deny an investigator access to your company's premises, he or she will eventually gain access by subpoena.
What triggers an investigation? Complaints by current or former employees can trigger an investigation. In addition, in the absence of a complaint, the DOL may simply select your workplace for investigation. Although all employers are subject to investigation, the DOL frequently undertakes targeted sweeps of employers in particular industries.
Should we contact an attorney upon learning of an investigation? It is advisable to contact an attorney with experience handling DOL investigations right away. An experienced attorney will offer advice concerning the technical and often confusing requirements of the FLSA and assist in making important decisions during the investigation.
What is the role of the DOL investigator and how should I interact with that person? The DOL will assign an investigator who will be your company's main DOL contact throughout the investigation. It is beneficial to establish a cooperative relationship with the investigator from the beginning. Your company should communicate to the investigator that, although it does not believe it has violated the FLSA, it will work cooperatively with the investigator, and, if violations are found, do what it takes to come into compliance. (Of course, if the company disagrees with the DOL's findings, it should be prepared to respectfully defend its position.)
What can an employer do during an investigation to limit its potential liability?
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Determine who will interact with the investigator (a company representative or attorney?).
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Determine the scope of the investigation (all locations? all employees?) before providing any information or documents.
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Carefully review all documents for accuracy before submitting them to the DOL.
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Consider submitting a detailed "position statement" setting forth the company's legal and factual support for its position.
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Train supervisors and managers on the pertinent issues so they are prepared for questions from the DOL and employees.
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Consider interviewing employees prior to the DOL interviews to gain accurate and thorough information.
What if the DOL finds that my company has violated the FLSA? If violations are found, the DOL first will require that the company change its pay practices so no additional violations occur. Once future compliance has been promised, the DOL will require that the company pay any back wages owed to current and/or former employees. The amount owed will depend on the nature of the violations and the number of employees at issue. A two-year statute of limitations applies to the recovery of back wages, except in the case of willful violations where a three-year statute of limitations applies. The DOL will state the amount of back wages it believes are owed, and then give the company an opportunity to submit its own calculation and supporting evidence. The DOL and employer then typically enter into settlement discussions to reach a resolution.
What if my company disagrees with the DOL's findings? If the company disagrees with the DOL's findings, it may refuse to comply with the DOL's orders. The DOL will then decide whether to file a lawsuit seeking to enjoin the company from further violations and compel payment of back wages. Even if the DOL does not pursue the case, any employee who believes he or she is owed money may file a private lawsuit.
What steps can my company take before an investigation to limit its liability? Employers should conduct self-audits to ensure compliance with the FLSA. Before doing so, the company should consult with employment counsel concerning the FLSA's various legal requirements; lack of knowledge is no defense to liability. In general, the company should:
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Review each employee's actual job duties and classification as exempt or non-exempt under the FLSA. Make adjustments as necessary.
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Update job descriptions regularly. For exempt positions, ensure that job descriptions include duties that meet the "duties" test of the applicable exemption.
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Review FLSA's record-keeping requirements. Maintain updated and accurate information.
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Prominently display the DOL's required FLSA poster in the workplace.
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Review rules regarding what is considered "working time" under the FLSA and ensure that non-exempt employees accurately record hours worked.
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Ensure correct calculation of overtime hours and compensation.
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Review state and federal child labor laws.
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Periodically review the status of independent contractors to ensure they are correctly paid as independent contractors rather than employees.
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Ensure that employees who complain of FLSA violations are not subject to retaliation.
Although this article addresses investigations conducted by the United States Department of Labor, state departments of labor conduct similar investigations under state law. Employers should contact their employment counsel for additional information.