Wage and Hour Audit Checklist – How to Prepare for a DOL Wage and Hour Audit

Wage and hour investigations by the Department of Labor are far more frequent than many employers realize, often covering issues surrounding minimum wage and overtime payments. These inquiries can span from complex disputes involving minimum wages to disputes over overtime payments and more.

Conducting regular self-audits helps ensure compliance and reduce the risk of Department of Labor investigations. Lexis Practice Advisor has created this checklist with best practices for meeting DOL audit requirements.

1. Identify Employees to be Audited
No matter the nature of your business, just the thought of an audit by the Department of Labor can be enough to cause anxiety. But these investigations are actually much more common than most employers realize; their purpose is to ensure employees receive appropriate wages for their services rendered, so even one employee complaint could prompt an inquiry by them.

To prevent being targeted by the Department of Labor (DOL), employers should create and keep detailed employment records. Policies and handbooks should be reviewed periodically to make sure they remain current, while creating such records can prove that your business abides by various laws such as equal pay for equal work or prohibiting discrimination.

DOL investigators may seek to review salary information of non-exempt workers and compare it with state and federal minimum wage regulations, employer deductions, and whether your non-exempt employees are receiving an appropriate minimum wage.

2. Conduct a Self-Audit
Audits serve a crucial purpose: verifying whether employees are receiving minimum wage and overtime pay. Even without notice from the Department of Labor (DOL), conducting your own self-audit is still recommended in order to prevent legal liability. A self-audit should include reviewing payroll records, policies, job descriptions and timekeeping methods – in addition to checking contracts with service providers for compliance with FLSA.

As investigations by the DOL can vary depending on their nature, they may visit your business either physically or virtually to inspect documents related to employment and interview employees. Therefore it is wise to involve your labor and employment counsel as early as possible so as to safeguard any audit results under work-product doctrine and attorney-client privilege and guide any steps that need to be taken by management to rectify issues or violations identified during audit process.

3. Schedule a Meeting with the DOL
Owing to its ease, DOL wage and hour audits should not be daunting experiences for HR managers. With proper preparation, however, they should become manageable events. Conducting routine self-audits is one way of assuring compliance with laws enforced by the DOL while helping identify any issues before they lead to investigation by law enforcement authorities.

An organization must regularly assess both exempt and nonexempt jobs within its organization. Furthermore, all hourly rate employees paid an hourly rate should at or above minimum wage and that deductions such as jury duty pay, maternity leave pay or uniform costs don’t reduce pay below its applicable overtime exemption thresholds.

Businesses should review positions that fall on the “edge,” such as an entry-level bookkeeper who may or may not qualify as exempt employees, chief financial officers and unpaid interns who may fall within this grey area. To be safe, businesses should also conduct risk analysis to determine their requirements as exempt workers or nonexempt.

4. Schedule a Meeting with Your Attorney
An audit by the DOL may seem like an invasion, but that may not necessarily be true. They tend to target businesses which pose higher risks of violating wage and hour regulations.

Oft times, the DOL will conduct an investigation by reviewing records and privately interviewing employees. Their investigation can lead to back wages or financial penalties being applied as a result.

At Simon Paschal PLLC in Dallas, our employment lawyers understand how crucial having a human resources attorney on your team is in minimizing the potential repercussions of an OSHA investigation. Our Dallas employment lawyers can guide you through this process while safeguarding your rights as a business owner. Reach out to us now at Simon Paschal PLLC to discover more how we can prepare you for an investigation and assist in conducting a self-audit to ensure compliance with federal and state wage and hour regulations in order to avoid costly fines!