Do You Need a Department of Labor Audit Checklist?

Labor Department wage and hour audits involve investigators coming to your business to conduct an investigation, reviewing employment records and potentially interviewing current and former employees during this process.

Wage and hour audits typically arise as a result of employee complaints. To protect your business, undertake regular self-audits to identify any compliance gaps and address them before they become issues.

1. Identify the Violations
Operating a business can be challenging enough without adding wage and hour compliance issues to the mix, yet these problems are all too prevalent among employers. Wage-hour audits conducted by the federal Department of Labor’s Wage and Hour Division to verify compliance with Fair Labor Standards Act (FLSA) audits should verify this – FLSA requires non-exempt employees be paid minimum wage plus overtime when their hours exceed forty in one workweek.

Wage and Hour auditors typically conduct audits for employers over the last two years, scrutinizing both current and former employees. If investigators suspect an employer has violated FLSA in any willful fashion, however, records could be reviewed back three years according to statute of limitations laws.

Audits involve either a physical or virtual visit from a government investigator. At that time, they will inspect your employment records and interview employees before inspecting your workplace to make sure all required posters are visible and in an easily visible place.

2. Document the Violations
The Department of Labor conducts audits on businesses for various purposes. They typically investigate companies in industries where violations are common, such as day care facilities, restaurants, garment manufacturers, janitorial services and health care agencies. They may also conduct specific investigations of violations such as failing to pay overtime wages or taking unauthorised deductions from employees’ paychecks.

If an investigator determines there have been violations, they will present their findings to the employer with a report and possible spreadsheet showing back wages owed. Please remember that signing this report does not equate to admitting guilt; rather it grants your right to defend yourself from allegations made against you.

At the closing conference, an investigator will present their findings and explain your post-audit rights. It is crucial that you listen closely and take notes during this discussion; any agreements made or admissions given could have serious repercussions for your business.

3. Resolve the Violations
Department of Labor investigators conduct wage and hour audits to ensure businesses comply with federal labor laws such as the Fair Labor Standards Act. This act requires non-exempt employees be paid at least minimum wage and overtime pay at time and a half; auditing processes typically last weeks to months with government agents reviewing employer records and conducting employee interviews.

The agency may conduct investigations at random, in response to employee complaints or in targeted industries like agriculture, restaurants, garment manufacturing, guard services and day care centers to screen for violations. Employees can file claims with the agency directly if unpaid wages have not been properly covered by an employer.

Employers should be ready to provide any document requested by an investigator of the Department of Labor (DOL), such as employee payroll records or documentation to support wage calculations such as time cards and piecework tickets, wage-rate tables, work and time schedules or proof of additions or deductions from wages. Employers taking proactive steps ahead of a DOL audit can avoid costly penalties associated with violations such as willful or repeated violations.

4. Schedule a Meeting with the DOL
At first glance, DOL audits may seem intimidating; however, with proper preparation and proactive steps taken towards compliance and the creation of policies that address red flags you can decrease the risk of an investigation or wage and hour audit by up to 40%.

DOL wage and hour investigators typically inspect payroll records from the last two years and interview employees as part of their investigations. It is advised to have translators available ahead of time in case employees speaking languages other than English require assistance with interview efforts.

If your employment files contain sensitive material, it’s wise to separate and label confidential or proprietary materials before the audit by the DOL. Also be sure to provide them with a list of people they can reach out to should they require more assistance or information; this will reduce delays and confusion due to being unaware of all necessary contacts and details in advance.