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Department Of Labor Audit Defense Lawyer: Investigation Process Overview

above-the-bar-logo-no12Did your business receive a notice from the Department of Labor (“DoL”) advising that it was auditing your books and records? Not only can this be a very stressful, time consuming and expensive process, it can distract you from running your business and raise many questions. What is the purpose of the visit? Who will the Department’s investigators be talking to? You should call our award-winning employment lawyers at (800) 893-9645 for a confidential consultation to learn your rights and options before an audit is commenced and before penalties or fines may be assessed against you.

Background

Generally speaking, the U.S. Department of Labor and the respective individual state agencies (including New York, New Jersey and Connecticut) have increased their enforcement of labor and hourly wage laws. A visit from the Wage and Hour Division (WHD) of the Department of Labor may occur because of a random audit or because of a specific complaint. Common complaints include wage and hour violations arising from underpayment of wages including overtime wages (for hours worked over 40 hours in a work week) or violations of other federal or state laws.

Specifically, the WHD is responsible for enforcing federal labor laws related, but not limited to the following areas:

-The Fair Labor Standards Act (FLSA);
-The Credit Protection Act (garnishment provisions);
-Employment Standards related to the Immigration and Naturalization Act;
-Some provisions of the Occupational Safety and Health Act (OSHA);
-Family & Medical Leave Act, and;
-The Migrant and Seasonal Agricultural Worker Protection Act
Pursuant to Section 11(a) of the FLSA, the DoL is authorized to investigate violations related to hours, wages, payroll and other employment practices. Section 11(a) of the FLSA provides, in pertinent part, that the Administrator for the DoL:

…”may investigate and gather data regarding the wages, hours and other conditions and practices of employment in any industry subject to this chapter, and may enter and inspect such places and such records (and may make such transcriptions thereof), question such employees and investigate such facts, conditions, practices, or matters as he may deem necessary or appropriate to determine whether any person has violated any provision of this chapter, or which may aid in the enforcement of the provisions of this chapter”, [Federal Labor Standards Act, Section 1(a)].

Moreover, the DoL may inspect an employer’s premises and records to ascertain whether the employer violated the FLSA. They may also wish to interview employees to verify whether the records kept by the employer accurately reflect the wages that were actually paid to the employees.

If the investigation by the DoL is based upon an employee or former employee’s complaint, the worker’s name, the nature of the complaint itself, or whether a complaint itself exists, are confidential and may not be disclosed. While you may suspect an specific employee is the cause of the complaint, you should not take any adverse action against that individual as such action may form the basis for an unlawful retaliation claim. If the investigation is not based upon a complaint, it may arise from the fact that the DoL regularly investigates certain types of businesses. Examples include low-wage industries, industries that have had frequent violations in the past, or, which have been the source of particularly egregious violations, or those that employ vulnerable workers such as child laborers or minorities who can easily be taken advantage of. Some

Tips On The Audit Investigation Process

After identifying himself/herself, the investigator from the WHD will explain the investigative process and advise the employer what records will be needed. The investigation usually involves the following steps:

1. Examining records to determine which laws or exemptions apply. Examples include the employer’s annual dollar volume of business transactions, participation in interstate commerce, or work related to government contracts.

2. Examining payroll and time records, taking notes and/or copying documents pertinent to the investigation.

3. Possibly interviewing some employees privately to verify the employer’s payroll and time records in order to identify the employees’ duties to determine if any exemptions apply, or to confirm whether any minors are employed legally.

All of these steps can be disruptive to your business and underscore the importance of maintaining accurate and contemporaneous employment-related documentation. Upon completion, the investigator will meet with the employer, or an authorized representative, in order to identify any violations and advise how to cure them, and whether back wages are owed. As noted above, employers should have experienced employment law counsel present during the process.

Remedies, Penalties And Enforcement Mechanisms

If violations are found and a resolution is not reached, the Secretary of Labor may commence legal action, on behalf of an aggrieved employee(s), to recover any back wages owed as well as liquidated damages in an amount equal to the back wages owed. Alternatively, the employee may also commence suit for the same relief. This is one of the most common lawsuits affecting employers today, in part, because the employee’s attorneys’ fees and court costs may also be recoverable. So if you are unsuccessful in a lawsuit, you could have to pay your own attorney and the employee’s attorney’s fees. Early action can save you money and time – it is critical you get experienced employment law counsel at the outset. In addition, the Secretary may also seek an injunction prohibiting any person from violating applicable laws, especially those related to minimum wage and overtime violations. Minimum wage and overtime violations related to child labor laws may also result in civil penalties. Lastly, criminal penalties, fines, and/or imprisonment may be imposed against employers for willful and/or repeated violations of the law.

Conclusion

The Department of Labor has broad authority to regulate many types of businesses covering a wide range of activities. Similarly, they also have equally broad authority to impose civil penalties and fines, including awarding back pay and liquidated damages in an amount equal to the back pay owed, which could be substantial in nature depending upon the nature of the violation. Willful and repeat offenders may also be subject to criminal penalties, including imprisonment. As such, employers would be well advised to heed all laws, rules, and regulations applicable to their business.

If your business has received a notice or is undergoing an audit, contact our award-winning employment lawyers at (800) 893-9645 to learn how to best protect your business and assets.

Disclaimer: 

Thank you for visiting our Blog. This blog provides general information and thoughts about various employment law issues primarily in the New York Tri-State area and occasionally in other areas. You are welcome to read the posts. However, do not construe any content on this blog as legal advice or the creation of an attorney-client relationship. Again, we provide the content only for informational purposes. You should not make decisions based information on our blog since the application of the law depends on the facts and each situation may be different. In addition, the law in most jurisdictions is different and changes constantly and we make no representations that any information on our blog has been updated. The Blog should not be used as a substitute for competent legal advice from an experienced employment law attorney in your state or jurisdiction.